Correlation Between LODESTAR MIN and Amgen

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

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

Diversification Opportunities for LODESTAR MIN and Amgen

-0.84

Correlation Coefficient

LODESTAR MIN  Amgen

Pay attention - limited upside

The 3 months correlation between LODESTAR and Amgen is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding LODESTAR MIN and Amgen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amgen Inc and LODESTAR MIN 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 LODESTAR MIN are associated (or correlated) with Amgen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amgen Inc has no effect on the direction of LODESTAR MIN i.e., LODESTAR MIN and Amgen go up and down completely randomly.

Pair Corralation between LODESTAR MIN and Amgen

Assuming the 90 days trading horizon LODESTAR MIN is expected to generate 48.19 times more return on investment than Amgen. However, LODESTAR MIN is 48.19 times more volatile than Amgen Inc. It trades about 0.09 of its potential returns per unit of risk. Amgen Inc is currently generating about -0.05 per unit of risk. If you would invest  0.44  in LODESTAR MIN on September 23, 2024 and sell it today you would earn a total of  8.33  from holding LODESTAR MIN or generate 1893.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	99.23%
Values	Daily Returns

LODESTAR MIN  vs.  Amgen Inc

LODESTAR MIN

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in LODESTAR MIN are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain forward-looking indicators, LODESTAR MIN exhibited solid returns over the last few months and may actually be approaching a breakup point.

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 uncertain performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with LODESTAR MIN and Amgen

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

The idea behind LODESTAR MIN and Amgen 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.

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.