Correlation Between Waters and Amgen
Can any of the company-specific risk be diversified away by investing in both Waters 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 Waters and Amgen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Waters and Amgen Inc, you can compare the effects of market volatilities on Waters 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 Waters with a short position of Amgen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Waters and Amgen.
Diversification Opportunities for Waters and Amgen
Very good diversification
The 3 months correlation between Waters and Amgen is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Waters and Amgen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amgen Inc and Waters 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 Waters 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 Waters i.e., Waters and Amgen go up and down completely randomly.
Pair Corralation between Waters and Amgen
Considering the 90-day investment horizon Waters is expected to generate 2.25 times more return on investment than Amgen. However, Waters is 2.25 times more volatile than Amgen Inc. It trades about 0.17 of its potential returns per unit of risk. Amgen Inc is currently generating about -0.14 per unit of risk. If you would invest 32,551 in Waters on August 27, 2024 and sell it today you would earn a total of 5,265 from holding Waters or generate 16.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Waters vs. Amgen Inc
Performance |
| Timeline |
| Waters |
| Amgen Inc |
Waters and Amgen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Waters and Amgen
The main advantage of trading using opposite Waters and Amgen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Waters 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.| Waters vs. IDEXX Laboratories | Waters vs. IQVIA Holdings | Waters vs. Charles River Laboratories | Waters vs. Revvity |
| Amgen vs. Eliem Therapeutics | Amgen vs. HCW Biologics | Amgen vs. Scpharmaceuticals | Amgen vs. Milestone Pharmaceuticals |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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