Correlation Between Amgen and Par Pacific

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

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

Diversification Opportunities for Amgen and Par Pacific

0.43

Correlation Coefficient

Amgen  Par Pacific

Very weak diversification

The 3 months correlation between Amgen and Par is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Amgen Inc and Par Pacific Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Par Pacific Holdings 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 Par Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Par Pacific Holdings has no effect on the direction of Amgen i.e., Amgen and Par Pacific go up and down completely randomly.

Pair Corralation between Amgen and Par Pacific

Given the investment horizon of 90 days Amgen Inc is expected to generate 0.64 times more return on investment than Par Pacific. However, Amgen Inc is 1.57 times less risky than Par Pacific. It trades about 0.05 of its potential returns per unit of risk. Par Pacific Holdings is currently generating about -0.03 per unit of risk. If you would invest  20,766  in Amgen Inc on October 3, 2024 and sell it today you would earn a total of  5,298  from holding Amgen Inc or generate 25.51% 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.  Par Pacific Holdings

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.

Par Pacific Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Par Pacific Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with conflicting performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Amgen and Par Pacific

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

The idea behind Amgen Inc and Par Pacific Holdings 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 Anywhere module to track or share privately all of your investments from the convenience of any device.