Correlation Between Vulcan Materials and Amgen

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

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

Diversification Opportunities for Vulcan Materials and Amgen

-0.47

Correlation Coefficient

Vulcan Materials  Amgen

Very good diversification

The 3 months correlation between Vulcan and Amgen is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan Materials and Amgen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amgen Inc and Vulcan Materials 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 Vulcan Materials 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 Vulcan Materials i.e., Vulcan Materials and Amgen go up and down completely randomly.

Pair Corralation between Vulcan Materials and Amgen

Assuming the 90 days horizon Vulcan Materials is expected to under-perform the Amgen. But the stock apears to be less risky and, when comparing its historical volatility, Vulcan Materials is 1.03 times less risky than Amgen. The stock trades about -0.42 of its potential returns per unit of risk. The Amgen Inc is currently generating about -0.26 of returns per unit of risk over similar time horizon. If you would invest  25,775  in Amgen Inc on October 10, 2024 and sell it today you would lose (1,000.00) from holding Amgen Inc or give up 3.88% of portfolio value over 90 days.

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

Vulcan Materials  vs.  Amgen Inc

Vulcan Materials

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vulcan Materials are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Vulcan Materials reported solid returns over the last few months and may actually be approaching a breakup point.

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 fragile performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Vulcan Materials and Amgen

The main advantage of trading using opposite Vulcan Materials and Amgen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vulcan Materials 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 Vulcan Materials 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.