Correlation Between Amgen and Nike

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

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

Diversification Opportunities for Amgen and Nike

0.5

Correlation Coefficient

Amgen  Nike

Very weak diversification

The 3 months correlation between Amgen and Nike is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Amgen Inc and Nike Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nike 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 Nike. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nike Inc has no effect on the direction of Amgen i.e., Amgen and Nike go up and down completely randomly.

Pair Corralation between Amgen and Nike

Given the investment horizon of 90 days Amgen Inc is expected to under-perform the Nike. But the stock apears to be less risky and, when comparing its historical volatility, Amgen Inc is 1.03 times less risky than Nike. The stock trades about -0.14 of its potential returns per unit of risk. The Nike Inc is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  8,132  in Nike Inc on September 3, 2024 and sell it today you would lose (255.00) from holding Nike Inc or give up 3.14% of portfolio value over 90 days.

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

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

Nike Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nike Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward-looking signals, Nike is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Amgen and Nike

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

The idea behind Amgen Inc and Nike 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.