Correlation Between Biogen and Amgen

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

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

Diversification Opportunities for Biogen and Amgen

-0.54

Correlation Coefficient

Biogen  Amgen

Excellent diversification

The 3 months correlation between Biogen and Amgen is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Biogen Inc and Amgen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amgen Inc and Biogen 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 Biogen Inc 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 Biogen i.e., Biogen and Amgen go up and down completely randomly.

Pair Corralation between Biogen and Amgen

Assuming the 90 days horizon Biogen Inc is expected to under-perform the Amgen. In addition to that, Biogen is 1.19 times more volatile than Amgen Inc. It trades about -0.14 of its total potential returns per unit of risk. Amgen Inc is currently generating about 0.14 per unit of volatility. If you would invest  26,317  in Amgen Inc on December 2, 2024 and sell it today you would earn a total of  3,183  from holding Amgen Inc or generate 12.09% return on investment over 90 days.

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

Biogen Inc  vs.  Amgen Inc

Biogen Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Biogen Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Amgen Inc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Amgen Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Amgen may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Biogen and Amgen

The main advantage of trading using opposite Biogen and Amgen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Biogen 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 Biogen Inc 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.