Correlation Between AMGEN and Coca Cola
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By analyzing existing cross correlation between AMGEN INC and The Coca Cola, you can compare the effects of market volatilities on AMGEN and Coca Cola 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 AMGEN with a short position of Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMGEN and Coca Cola.
Diversification Opportunities for AMGEN and Coca Cola
Very poor diversification
The 3 months correlation between AMGEN and Coca is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding AMGEN INC and The Coca Cola in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola and AMGEN 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 AMGEN INC are associated (or correlated) with Coca Cola. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coca Cola has no effect on the direction of AMGEN i.e., AMGEN and Coca Cola go up and down completely randomly.
Pair Corralation between AMGEN and Coca Cola
Assuming the 90 days trading horizon AMGEN is expected to generate 7.8 times less return on investment than Coca Cola. But when comparing it to its historical volatility, AMGEN INC is 1.95 times less risky than Coca Cola. It trades about 0.0 of its potential returns per unit of risk. The Coca Cola is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 6,016 in The Coca Cola on August 26, 2024 and sell it today you would earn a total of 376.00 from holding The Coca Cola or generate 6.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.4% |
| Values | Daily Returns |
AMGEN INC vs. The Coca Cola
Performance |
| Timeline |
| AMGEN INC |
| Coca Cola |
AMGEN and Coca Cola Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AMGEN and Coca Cola
The main advantage of trading using opposite AMGEN and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMGEN position performs unexpectedly, Coca Cola 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 Coca Cola will offset losses from the drop in Coca Cola's long position.The idea behind AMGEN INC and The Coca Cola pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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