Correlation Between United Fire and Amgen
Can any of the company-specific risk be diversified away by investing in both United Fire and Amgen at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining United Fire and Amgen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Fire Group and Amgen Inc, you can compare the effects of market volatilities on United Fire and Amgen and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in United Fire with a short position of Amgen. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Fire and Amgen.
Diversification Opportunities for United Fire and Amgen
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between United and Amgen is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding United Fire Group and Amgen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amgen Inc and United Fire is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on United Fire Group are associated (or correlated) with Amgen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amgen Inc has no effect on the direction of United Fire i.e., United Fire and Amgen go up and down completely randomly.
Pair Corralation between United Fire and Amgen
Given the investment horizon of 90 days United Fire Group is expected to generate 1.98 times more return on investment than Amgen. However, United Fire is 1.98 times more volatile than Amgen Inc. It trades about 0.1 of its potential returns per unit of risk. Amgen Inc is currently generating about -0.03 per unit of risk. If you would invest 2,183 in United Fire Group on September 1, 2024 and sell it today you would earn a total of 877.00 from holding United Fire Group or generate 40.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Fire Group vs. Amgen Inc
Performance |
| Timeline |
| United Fire Group |
| Amgen Inc |
United Fire and Amgen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Fire and Amgen
The main advantage of trading using opposite United Fire and Amgen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Fire position performs unexpectedly, Amgen can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Amgen will offset losses from the drop in Amgen's long position.| United Fire vs. Donegal Group B | United Fire vs. Horace Mann Educators | United Fire vs. Donegal Group A | United Fire vs. Global Indemnity PLC |
| Amgen vs. Tff Pharmaceuticals | Amgen vs. Eliem Therapeutics | Amgen vs. Inhibrx | Amgen vs. Enliven Therapeutics |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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