Correlation Between SLR Investment and Amgen

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

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

Diversification Opportunities for SLR Investment and Amgen

-0.83

Correlation Coefficient

SLR Investment  Amgen

Pay attention - limited upside

The 3 months correlation between SLR and Amgen is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding SLR Investment Corp and Amgen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amgen Inc and SLR Investment 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 SLR Investment Corp 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 SLR Investment i.e., SLR Investment and Amgen go up and down completely randomly.

Pair Corralation between SLR Investment and Amgen

Assuming the 90 days horizon SLR Investment Corp is expected to generate 0.92 times more return on investment than Amgen. However, SLR Investment Corp is 1.09 times less risky than Amgen. It trades about 0.21 of its potential returns per unit of risk. Amgen Inc is currently generating about -0.16 per unit of risk. If you would invest  1,320  in SLR Investment Corp on October 10, 2024 and sell it today you would earn a total of  266.00  from holding SLR Investment Corp or generate 20.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.33%
Values	Daily Returns

SLR Investment Corp  vs.  Amgen Inc

SLR Investment Corp

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SLR Investment Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, SLR Investment 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 SLR Investment and Amgen

The main advantage of trading using opposite SLR Investment and Amgen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SLR Investment 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 SLR Investment Corp 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.