Correlation Between Amgen and Capital One

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

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

Diversification Opportunities for Amgen and Capital One

0.84

Correlation Coefficient

Amgen  Capital One

Very poor diversification

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

Pair Corralation between Amgen and Capital One

Given the investment horizon of 90 days Amgen Inc is expected to under-perform the Capital One. In addition to that, Amgen is 1.33 times more volatile than Capital One Financial. It trades about -0.14 of its total potential returns per unit of risk. Capital One Financial is currently generating about -0.12 per unit of volatility. If you would invest  1,983  in Capital One Financial on October 20, 2024 and sell it today you would lose (181.00) from holding Capital One Financial or give up 9.13% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Amgen Inc  vs.  Capital One Financial

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

Capital One Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Capital One Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Preferred Stock's technical and fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Amgen and Capital One

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

The idea behind Amgen Inc and Capital One Financial 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.