Correlation Between Amgen and Air Lease

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

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

Diversification Opportunities for Amgen and Air Lease

0.05

Correlation Coefficient

Amgen  Air Lease

Significant diversification

The 3 months correlation between Amgen and Air is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Amgen Inc and Air Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Lease 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 Air Lease. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Lease has no effect on the direction of Amgen i.e., Amgen and Air Lease go up and down completely randomly.

Pair Corralation between Amgen and Air Lease

Given the investment horizon of 90 days Amgen Inc is expected to generate 1.34 times more return on investment than Air Lease. However, Amgen is 1.34 times more volatile than Air Lease. It trades about 0.26 of its potential returns per unit of risk. Air Lease is currently generating about 0.0 per unit of risk. If you would invest  26,999  in Amgen Inc on February 20, 2024 and sell it today you would earn a total of  4,460  from holding Amgen Inc or generate 16.52% return on investment over 90 days.

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

Amgen Inc  vs.  Air Lease

Amgen Inc

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Amgen Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting technical and fundamental indicators, Amgen may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Air Lease

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Air Lease are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite weak essential indicators, Air Lease disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Amgen and Air Lease

The main advantage of trading using opposite Amgen and Air Lease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amgen position performs unexpectedly, Air Lease 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 Air Lease will offset losses from the drop in Air Lease's long position.

The idea behind Amgen Inc and Air Lease 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.