Correlation Between Amgen and Gentex
Can any of the company-specific risk be diversified away by investing in both Amgen and Gentex 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 Gentex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amgen Inc and Gentex, you can compare the effects of market volatilities on Amgen and Gentex 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 Gentex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amgen and Gentex.
Diversification Opportunities for Amgen and Gentex
Good diversification
The 3 months correlation between Amgen and Gentex is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Amgen Inc and Gentex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gentex 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 Gentex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gentex has no effect on the direction of Amgen i.e., Amgen and Gentex go up and down completely randomly.
Pair Corralation between Amgen and Gentex
Given the investment horizon of 90 days Amgen is expected to generate 1.02 times less return on investment than Gentex. In addition to that, Amgen is 1.1 times more volatile than Gentex. It trades about 0.02 of its total potential returns per unit of risk. Gentex is currently generating about 0.02 per unit of volatility. If you would invest 2,683 in Gentex on September 23, 2024 and sell it today you would earn a total of 232.00 from holding Gentex or generate 8.65% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Amgen Inc vs. Gentex
Performance |
Timeline |
Amgen Inc |
Gentex |
Amgen and Gentex Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Amgen and Gentex
The main advantage of trading using opposite Amgen and Gentex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amgen position performs unexpectedly, Gentex 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 Gentex will offset losses from the drop in Gentex's long position.Amgen vs. Fate Therapeutics | Amgen vs. Sana Biotechnology | Amgen vs. Caribou Biosciences | Amgen vs. Arcus Biosciences |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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