Correlation Between Regeneron Pharmaceuticals and Starbucks

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

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

Diversification Opportunities for Regeneron Pharmaceuticals and Starbucks

-0.75

Correlation Coefficient

Regeneron Pharmaceuticals  Starbucks

Pay attention - limited upside

The 3 months correlation between Regeneron and Starbucks is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Regeneron Pharmaceuticals and Starbucks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starbucks and Regeneron Pharmaceuticals 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 Regeneron Pharmaceuticals are associated (or correlated) with Starbucks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Starbucks has no effect on the direction of Regeneron Pharmaceuticals i.e., Regeneron Pharmaceuticals and Starbucks go up and down completely randomly.

Pair Corralation between Regeneron Pharmaceuticals and Starbucks

Given the investment horizon of 90 days Regeneron Pharmaceuticals is expected to under-perform the Starbucks. In addition to that, Regeneron Pharmaceuticals is 1.02 times more volatile than Starbucks. It trades about -0.34 of its total potential returns per unit of risk. Starbucks is currently generating about 0.19 per unit of volatility. If you would invest  9,643  in Starbucks on September 5, 2024 and sell it today you would earn a total of  514.00  from holding Starbucks or generate 5.33% return on investment over 90 days.

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

Regeneron Pharmaceuticals  vs.  Starbucks

Regeneron Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Regeneron Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Starbucks

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Starbucks are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Starbucks may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Regeneron Pharmaceuticals and Starbucks

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

The idea behind Regeneron Pharmaceuticals and Starbucks 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.