Correlation Between IShares Core and Amgen
Can any of the company-specific risk be diversified away by investing in both IShares Core 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 IShares Core and Amgen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Core MSCI and Amgen Inc, you can compare the effects of market volatilities on IShares Core 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 IShares Core with a short position of Amgen. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and Amgen.
Diversification Opportunities for IShares Core and Amgen
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between IShares and Amgen is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core MSCI and Amgen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amgen Inc and IShares Core 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 iShares Core MSCI 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 IShares Core i.e., IShares Core and Amgen go up and down completely randomly.
Pair Corralation between IShares Core and Amgen
Given the investment horizon of 90 days iShares Core MSCI is expected to generate 0.61 times more return on investment than Amgen. However, iShares Core MSCI is 1.64 times less risky than Amgen. It trades about -0.14 of its potential returns per unit of risk. Amgen Inc is currently generating about -0.1 per unit of risk. If you would invest 7,384 in iShares Core MSCI on January 25, 2024 and sell it today you would lose (168.00) from holding iShares Core MSCI or give up 2.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Core MSCI vs. Amgen Inc
Performance |
| Timeline |
| iShares Core MSCI |
| Amgen Inc |
IShares Core and Amgen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and Amgen
The main advantage of trading using opposite IShares Core and Amgen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core 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.| IShares Core vs. SPDR MSCI Emerging | IShares Core vs. SPDR MSCI USA | IShares Core vs. SPDR MSCI World | IShares Core vs. SPDR SSGA Large |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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