Correlation Between Amgen and Nova Minerals

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

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

Diversification Opportunities for Amgen and Nova Minerals

-0.47

Correlation Coefficient

Amgen  Nova Minerals

Very good diversification

The 3 months correlation between Amgen and Nova is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Amgen Inc and Nova Minerals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nova Minerals Limited 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 Nova Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nova Minerals Limited has no effect on the direction of Amgen i.e., Amgen and Nova Minerals go up and down completely randomly.

Pair Corralation between Amgen and Nova Minerals

Given the investment horizon of 90 days Amgen is expected to generate 131.72 times less return on investment than Nova Minerals. But when comparing it to its historical volatility, Amgen Inc is 19.91 times less risky than Nova Minerals. It trades about 0.02 of its potential returns per unit of risk. Nova Minerals Limited is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  94.00  in Nova Minerals Limited on September 13, 2024 and sell it today you would earn a total of  305.00  from holding Nova Minerals Limited or generate 324.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	19.39%
Values	Daily Returns

Amgen Inc  vs.  Nova Minerals Limited

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 inconsistent 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.

Nova Minerals Limited

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nova Minerals Limited are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Nova Minerals showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Amgen and Nova Minerals

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

The idea behind Amgen Inc and Nova Minerals Limited 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.