Correlation Between Banc Of and Amgen

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Can any of the company-specific risk be diversified away by investing in both Banc Of and Amgen 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 Banc Of and Amgen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banc of California and Amgen Inc, you can compare the effects of market volatilities on Banc Of and Amgen 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 Banc Of with a short position of Amgen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banc Of and Amgen.

Diversification Opportunities for Banc Of and Amgen

-0.77
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Banc and Amgen is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Banc of California and Amgen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amgen Inc and Banc Of 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 Banc of California are associated (or correlated) with Amgen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amgen Inc has no effect on the direction of Banc Of i.e., Banc Of and Amgen go up and down completely randomly.

Pair Corralation between Banc Of and Amgen

Assuming the 90 days trading horizon Banc of California is expected to generate 0.36 times more return on investment than Amgen. However, Banc of California is 2.79 times less risky than Amgen. It trades about 0.15 of its potential returns per unit of risk. Amgen Inc is currently generating about -0.3 per unit of risk. If you would invest  2,450  in Banc of California on September 22, 2024 and sell it today you would earn a total of  40.00  from holding Banc of California or generate 1.63% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Banc of California  vs.  Amgen Inc

 Performance 
       Timeline  
Banc of California 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Banc of California are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Banc Of is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.
Amgen Inc 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Banc Of and Amgen Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Banc Of and Amgen

The main advantage of trading using opposite Banc Of and Amgen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banc Of position performs unexpectedly, Amgen 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 Amgen will offset losses from the drop in Amgen's long position.
The idea behind Banc of California and Amgen 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.

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