Correlation Between Amgen and LB Foster
Can any of the company-specific risk be diversified away by investing in both Amgen and LB Foster 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 LB Foster into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amgen Inc and LB Foster, you can compare the effects of market volatilities on Amgen and LB Foster 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 LB Foster. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amgen and LB Foster.
Diversification Opportunities for Amgen and LB Foster
Pay attention - limited upside
The 3 months correlation between Amgen and FSTR is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding Amgen Inc and LB Foster in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LB Foster 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 LB Foster. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LB Foster has no effect on the direction of Amgen i.e., Amgen and LB Foster go up and down completely randomly.
Pair Corralation between Amgen and LB Foster
Given the investment horizon of 90 days Amgen Inc is expected to under-perform the LB Foster. But the stock apears to be less risky and, when comparing its historical volatility, Amgen Inc is 1.92 times less risky than LB Foster. The stock trades about -0.15 of its potential returns per unit of risk. The LB Foster is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 1,944 in LB Foster on September 25, 2024 and sell it today you would earn a total of 680.00 from holding LB Foster or generate 34.98% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Amgen Inc vs. LB Foster
Performance |
Timeline |
Amgen Inc |
LB Foster |
Amgen and LB Foster Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Amgen and LB Foster
The main advantage of trading using opposite Amgen and LB Foster positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amgen position performs unexpectedly, LB Foster 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 LB Foster will offset losses from the drop in LB Foster's long position.Amgen vs. Fate Therapeutics | Amgen vs. Caribou Biosciences | Amgen vs. Arcus Biosciences | Amgen vs. Karyopharm Therapeutics |
LB Foster vs. Steel Partners Holdings | LB Foster vs. Brookfield Business Partners | LB Foster vs. Griffon | LB Foster vs. Tejon Ranch Co |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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