Correlation Between Amgen and Plexus Corp

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

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

Diversification Opportunities for Amgen and Plexus Corp

-0.82

Correlation Coefficient

Amgen  Plexus Corp

Pay attention - limited upside

The 3 months correlation between Amgen and Plexus is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Amgen Inc and Plexus Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plexus Corp 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 Plexus Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plexus Corp has no effect on the direction of Amgen i.e., Amgen and Plexus Corp go up and down completely randomly.

Pair Corralation between Amgen and Plexus Corp

Given the investment horizon of 90 days Amgen Inc is expected to under-perform the Plexus Corp. In addition to that, Amgen is 1.45 times more volatile than Plexus Corp. It trades about -0.09 of its total potential returns per unit of risk. Plexus Corp is currently generating about 0.29 per unit of volatility. If you would invest  15,621  in Plexus Corp on September 17, 2024 and sell it today you would earn a total of  990.00  from holding Plexus Corp or generate 6.34% 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.  Plexus Corp

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 inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Plexus Corp

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Plexus Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Plexus Corp unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Amgen and Plexus Corp

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

The idea behind Amgen Inc and Plexus Corp 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.