Correlation Between Amgen and 539830BX6

Can any of the company-specific risk be diversified away by investing in both Amgen and 539830BX6 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 539830BX6 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Amgen Inc and LMT 57 15 NOV 54, you can compare the effects of market volatilities on Amgen and 539830BX6 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 539830BX6. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amgen and 539830BX6.

Diversification Opportunities for Amgen and 539830BX6

0.58

Correlation Coefficient

Amgen  539830BX6

Very weak diversification

The 3 months correlation between Amgen and 539830BX6 is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Amgen Inc and LMT 57 15 NOV 54 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LMT 57 15 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 539830BX6. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LMT 57 15 has no effect on the direction of Amgen i.e., Amgen and 539830BX6 go up and down completely randomly.

Pair Corralation between Amgen and 539830BX6

Given the investment horizon of 90 days Amgen Inc is expected to under-perform the 539830BX6. In addition to that, Amgen is 1.97 times more volatile than LMT 57 15 NOV 54. It trades about -0.18 of its total potential returns per unit of risk. LMT 57 15 NOV 54 is currently generating about -0.08 per unit of volatility. If you would invest  11,407  in LMT 57 15 NOV 54 on September 15, 2024 and sell it today you would lose (503.00) from holding LMT 57 15 NOV 54 or give up 4.41% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	93.75%
Values	Daily Returns

Amgen Inc  vs.  LMT 57 15 NOV 54

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.

LMT 57 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LMT 57 15 NOV 54 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 539830BX6 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Amgen and 539830BX6

The main advantage of trading using opposite Amgen and 539830BX6 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amgen position performs unexpectedly, 539830BX6 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 539830BX6 will offset losses from the drop in 539830BX6's long position.

The idea behind Amgen Inc and LMT 57 15 NOV 54 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.

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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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.