Correlation Between Amgen and Dunham Emerging

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

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

Diversification Opportunities for Amgen and Dunham Emerging

0.79

Correlation Coefficient

Amgen  Dunham Emerging

Poor diversification

The 3 months correlation between Amgen and Dunham is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Amgen Inc and Dunham Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dunham Emerging Markets 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 Dunham Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dunham Emerging Markets has no effect on the direction of Amgen i.e., Amgen and Dunham Emerging go up and down completely randomly.

Pair Corralation between Amgen and Dunham Emerging

Given the investment horizon of 90 days Amgen Inc is expected to generate 1.18 times more return on investment than Dunham Emerging. However, Amgen is 1.18 times more volatile than Dunham Emerging Markets. It trades about 0.17 of its potential returns per unit of risk. Dunham Emerging Markets is currently generating about 0.09 per unit of risk. If you would invest  30,019  in Amgen Inc on March 29, 2024 and sell it today you would earn a total of  1,263  from holding Amgen Inc or generate 4.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Amgen Inc  vs.  Dunham Emerging Markets

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 weak technical and fundamental indicators, Amgen may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Dunham Emerging Markets

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dunham Emerging Markets are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Dunham Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Amgen and Dunham Emerging

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

The idea behind Amgen Inc and Dunham Emerging Markets 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.