Correlation Between Dave Busters and Amgen

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

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

Diversification Opportunities for Dave Busters and Amgen

0.57

Correlation Coefficient

Dave Busters  Amgen

Very weak diversification

The 3 months correlation between Dave and Amgen is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Dave Busters Entertainment and Amgen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amgen Inc and Dave Busters 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 Dave Busters Entertainment 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 Dave Busters i.e., Dave Busters and Amgen go up and down completely randomly.

Pair Corralation between Dave Busters and Amgen

Given the investment horizon of 90 days Dave Busters Entertainment is expected to generate 2.66 times more return on investment than Amgen. However, Dave Busters is 2.66 times more volatile than Amgen Inc. It trades about -0.02 of its potential returns per unit of risk. Amgen Inc is currently generating about -0.1 per unit of risk. If you would invest  3,664  in Dave Busters Entertainment on October 8, 2024 and sell it today you would lose (627.00) from holding Dave Busters Entertainment or give up 17.11% of portfolio value over 90 days.

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

Dave Busters Entertainment  vs.  Amgen Inc

Dave Busters Enterta

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dave Busters Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Dave Busters is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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.

Pair Trading with Dave Busters and Amgen

The main advantage of trading using opposite Dave Busters and Amgen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dave Busters 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 Dave Busters Entertainment 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.