Correlation Between Amgen and Salesforce

Can any of the company-specific risk be diversified away by investing in both Amgen and Salesforce 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 Amgen and Salesforce into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Amgen Inc and Salesforce, you can compare the effects of market volatilities on Amgen and Salesforce 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 Salesforce. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amgen and Salesforce.

Diversification Opportunities for Amgen and Salesforce

-0.75

Correlation Coefficient

Amgen  Salesforce

Pay attention - limited upside

The 3 months correlation between Amgen and Salesforce is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Amgen Inc and Salesforce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salesforce 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 Salesforce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salesforce has no effect on the direction of Amgen i.e., Amgen and Salesforce go up and down completely randomly.

Pair Corralation between Amgen and Salesforce

Assuming the 90 days trading horizon Amgen Inc is expected to under-perform the Salesforce. In addition to that, Amgen is 1.12 times more volatile than Salesforce. It trades about -0.04 of its total potential returns per unit of risk. Salesforce is currently generating about 0.18 per unit of volatility. If you would invest  30,540  in Salesforce on September 18, 2024 and sell it today you would earn a total of  3,150  from holding Salesforce or generate 10.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Amgen Inc  vs.  Salesforce

Amgen Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amgen Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Salesforce

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Salesforce are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Salesforce unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Amgen and Salesforce

The main advantage of trading using opposite Amgen and Salesforce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amgen position performs unexpectedly, Salesforce 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 Salesforce will offset losses from the drop in Salesforce's long position.

The idea behind Amgen Inc and Salesforce 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.