Correlation Between Verizon Communications and Amgen
Can any of the company-specific risk be diversified away by investing in both Verizon Communications 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 Verizon Communications and Amgen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Verizon Communications and Amgen Inc, you can compare the effects of market volatilities on Verizon Communications 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 Verizon Communications with a short position of Amgen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Verizon Communications and Amgen.
Diversification Opportunities for Verizon Communications and Amgen
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Verizon and Amgen is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications and Amgen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amgen Inc and Verizon Communications 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 Verizon Communications 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 Verizon Communications i.e., Verizon Communications and Amgen go up and down completely randomly.
Pair Corralation between Verizon Communications and Amgen
Assuming the 90 days horizon Verizon Communications is expected to generate 1.0 times more return on investment than Amgen. However, Verizon Communications is 1.0 times more volatile than Amgen Inc. It trades about 0.04 of its potential returns per unit of risk. Amgen Inc is currently generating about -0.07 per unit of risk. If you would invest 88,565 in Verizon Communications on September 3, 2024 and sell it today you would earn a total of 2,185 from holding Verizon Communications or generate 2.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Verizon Communications vs. Amgen Inc
Performance |
| Timeline |
| Verizon Communications |
| Amgen Inc |
Verizon Communications and Amgen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Verizon Communications and Amgen
The main advantage of trading using opposite Verizon Communications and Amgen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Verizon Communications 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.| Verizon Communications vs. FibraHotel | Verizon Communications vs. Applied Materials | Verizon Communications vs. Lloyds Banking Group | Verizon Communications vs. McEwen Mining |
| Amgen vs. CVS Health | Amgen vs. Delta Air Lines | Amgen vs. Verizon Communications | Amgen vs. Grupo Sports World |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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