Correlation Between Amgen and BRP

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

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

Diversification Opportunities for Amgen and BRP

0.41

Correlation Coefficient

Amgen  BRP

Very weak diversification

The 3 months correlation between Amgen and BRP is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Amgen Inc and BRP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRP 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 are associated (or correlated) with BRP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRP Inc has no effect on the direction of Amgen i.e., Amgen and BRP go up and down completely randomly.

Pair Corralation between Amgen and BRP

Given the investment horizon of 90 days Amgen Inc is expected to generate 0.66 times more return on investment than BRP. However, Amgen Inc is 1.51 times less risky than BRP. It trades about 0.02 of its potential returns per unit of risk. BRP Inc is currently generating about -0.03 per unit of risk. If you would invest  24,696  in Amgen Inc on October 11, 2024 and sell it today you would earn a total of  1,725  from holding Amgen Inc or generate 6.98% return on investment over 90 days.

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

Amgen Inc  vs.  BRP Inc

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 conflicting 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.

BRP Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BRP Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Amgen and BRP

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

The idea behind Amgen Inc and BRP 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.