Correlation Between Amgen and Omni Health

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

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

Diversification Opportunities for Amgen and Omni Health

0.0

Correlation Coefficient

Amgen  Omni Health

Pay attention - limited upside

The 3 months correlation between Amgen and Omni is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Amgen Inc and Omni Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Omni Health 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 Omni Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Omni Health has no effect on the direction of Amgen i.e., Amgen and Omni Health go up and down completely randomly.

Pair Corralation between Amgen and Omni Health

Given the investment horizon of 90 days Amgen Inc is expected to under-perform the Omni Health. But the stock apears to be less risky and, when comparing its historical volatility, Amgen Inc is 75.12 times less risky than Omni Health. The stock trades about -0.16 of its potential returns per unit of risk. The Omni Health is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Omni Health on September 12, 2024 and sell it today you would earn a total of  0.00  from holding Omni Health or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Amgen Inc  vs.  Omni Health

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.

Omni Health

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Omni Health are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical indicators, Omni Health exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Amgen and Omni Health

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

The idea behind Amgen Inc and Omni Health 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .