Correlation Between Dell Technologies and Amgen

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

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

Diversification Opportunities for Dell Technologies and Amgen

-0.69

Correlation Coefficient

Dell Technologies  Amgen

Excellent diversification

The 3 months correlation between Dell and Amgen is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Dell Technologies and Amgen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amgen Inc and Dell Technologies 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 Dell Technologies 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 Dell Technologies i.e., Dell Technologies and Amgen go up and down completely randomly.

Pair Corralation between Dell Technologies and Amgen

Assuming the 90 days trading horizon Dell Technologies is expected to under-perform the Amgen. But the stock apears to be less risky and, when comparing its historical volatility, Dell Technologies is 1.18 times less risky than Amgen. The stock trades about -0.11 of its potential returns per unit of risk. The Amgen Inc is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  5,704  in Amgen Inc on December 30, 2024 and sell it today you would earn a total of  612.00  from holding Amgen Inc or generate 10.73% return on investment over 90 days.

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

Dell Technologies  vs.  Amgen Inc

Dell Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dell Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Amgen Inc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Amgen Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Amgen sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dell Technologies and Amgen

The main advantage of trading using opposite Dell Technologies and Amgen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dell Technologies 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 Dell Technologies 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.

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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.