Correlation Between AMGEN and Tesla

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

By analyzing existing cross correlation between AMGEN INC 44 and Tesla Inc, you can compare the effects of market volatilities on AMGEN and Tesla 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 Tesla. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMGEN and Tesla.

Diversification Opportunities for AMGEN and Tesla

-0.1

Correlation Coefficient

AMGEN  Tesla

Good diversification

The 3 months correlation between AMGEN and Tesla is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding AMGEN INC 44 and Tesla Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tesla Inc 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 44 are associated (or correlated) with Tesla. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tesla Inc has no effect on the direction of AMGEN i.e., AMGEN and Tesla go up and down completely randomly.

Pair Corralation between AMGEN and Tesla

Assuming the 90 days trading horizon AMGEN INC 44 is expected to under-perform the Tesla. But the bond apears to be less risky and, when comparing its historical volatility, AMGEN INC 44 is 6.39 times less risky than Tesla. The bond trades about -0.15 of its potential returns per unit of risk. The Tesla Inc is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  22,678  in Tesla Inc on September 15, 2024 and sell it today you would earn a total of  20,945  from holding Tesla Inc or generate 92.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

AMGEN INC 44  vs.  Tesla Inc

AMGEN INC 44

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AMGEN INC 44 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for AMGEN INC 44 investors.

Tesla Inc

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tesla Inc are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal essential indicators, Tesla sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AMGEN and Tesla

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

The idea behind AMGEN INC 44 and Tesla Inc 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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.