Correlation Between Regeneron Pharmaceuticals and Valens

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

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

Diversification Opportunities for Regeneron Pharmaceuticals and Valens

0.43

Correlation Coefficient

Regeneron Pharmaceuticals  Valens

Very weak diversification

The 3 months correlation between Regeneron and Valens is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Regeneron Pharmaceuticals and Valens in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valens 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 Valens. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valens has no effect on the direction of Regeneron Pharmaceuticals i.e., Regeneron Pharmaceuticals and Valens go up and down completely randomly.

Pair Corralation between Regeneron Pharmaceuticals and Valens

Given the investment horizon of 90 days Regeneron Pharmaceuticals is expected to under-perform the Valens. But the stock apears to be less risky and, when comparing its historical volatility, Regeneron Pharmaceuticals is 2.68 times less risky than Valens. The stock trades about -0.23 of its potential returns per unit of risk. The Valens is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  245.00  in Valens on September 5, 2024 and sell it today you would lose (19.00) from holding Valens or give up 7.76% of portfolio value over 90 days.

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

Regeneron Pharmaceuticals  vs.  Valens

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.

Valens

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Valens are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile essential indicators, Valens displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Regeneron Pharmaceuticals and Valens

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

The idea behind Regeneron Pharmaceuticals and Valens 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.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.