Correlation Between Amgen and Mallinckrodt Plc
Can any of the company-specific risk be diversified away by investing in both Amgen and Mallinckrodt Plc 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 Amgen and Mallinckrodt Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amgen Inc and Mallinckrodt Plc, you can compare the effects of market volatilities on Amgen and Mallinckrodt Plc 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 Amgen with a short position of Mallinckrodt Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amgen and Mallinckrodt Plc.
Diversification Opportunities for Amgen and Mallinckrodt Plc
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Amgen and Mallinckrodt is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Amgen Inc and Mallinckrodt Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mallinckrodt Plc and Amgen 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 Amgen Inc are associated (or correlated) with Mallinckrodt Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mallinckrodt Plc has no effect on the direction of Amgen i.e., Amgen and Mallinckrodt Plc go up and down completely randomly.
Pair Corralation between Amgen and Mallinckrodt Plc
If you would invest 34.00 in Mallinckrodt Plc on January 17, 2024 and sell it today you would earn a total of 0.00 from holding Mallinckrodt Plc or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
Amgen Inc vs. Mallinckrodt Plc
Performance |
| Timeline |
| Amgen Inc |
| Mallinckrodt Plc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Amgen and Mallinckrodt Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amgen and Mallinckrodt Plc
The main advantage of trading using opposite Amgen and Mallinckrodt Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amgen position performs unexpectedly, Mallinckrodt Plc 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 Mallinckrodt Plc will offset losses from the drop in Mallinckrodt Plc's long position.The idea behind Amgen Inc and Mallinckrodt Plc 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.| Mallinckrodt Plc vs. Lifecore Biomedical | Mallinckrodt Plc vs. Lucy Scientific Discovery | Mallinckrodt Plc vs. Alimera Sciences | Mallinckrodt Plc vs. Shuttle Pharmaceuticals |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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