Correlation Between Pure Storage and Amgen

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

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

Diversification Opportunities for Pure Storage and Amgen

-0.43

Correlation Coefficient

Pure Storage  Amgen

Very good diversification

The 3 months correlation between Pure and Amgen is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Pure Storage and Amgen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amgen Inc and Pure Storage 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 Pure Storage 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 Pure Storage i.e., Pure Storage and Amgen go up and down completely randomly.

Pair Corralation between Pure Storage and Amgen

Assuming the 90 days horizon Pure Storage is expected to under-perform the Amgen. In addition to that, Pure Storage is 2.62 times more volatile than Amgen Inc. It trades about -0.1 of its total potential returns per unit of risk. Amgen Inc is currently generating about 0.17 per unit of volatility. If you would invest  25,439  in Amgen Inc on December 20, 2024 and sell it today you would earn a total of  3,451  from holding Amgen Inc or generate 13.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Pure Storage  vs.  Amgen Inc

Pure Storage

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pure Storage has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Amgen Inc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Amgen Inc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain technical and fundamental indicators, Amgen displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pure Storage and Amgen

The main advantage of trading using opposite Pure Storage and Amgen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pure Storage 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 Pure Storage 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.

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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.