Correlation Between Boeing and Regeneron Pharmaceuticals

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Can any of the company-specific risk be diversified away by investing in both Boeing and Regeneron Pharmaceuticals 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 Boeing and Regeneron Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boeing Company and Regeneron Pharmaceuticals, you can compare the effects of market volatilities on Boeing and Regeneron Pharmaceuticals 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 Boeing with a short position of Regeneron Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boeing and Regeneron Pharmaceuticals.

Diversification Opportunities for Boeing and Regeneron Pharmaceuticals

-0.29
  Correlation Coefficient

Very good diversification

The 3 months correlation between Boeing and Regeneron is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Boeing Company and Regeneron Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regeneron Pharmaceuticals and Boeing 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 Boeing Company are associated (or correlated) with Regeneron Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regeneron Pharmaceuticals has no effect on the direction of Boeing i.e., Boeing and Regeneron Pharmaceuticals go up and down completely randomly.

Pair Corralation between Boeing and Regeneron Pharmaceuticals

Allowing for the 90-day total investment horizon Boeing Company is expected to generate 1.29 times more return on investment than Regeneron Pharmaceuticals. However, Boeing is 1.29 times more volatile than Regeneron Pharmaceuticals. It trades about 0.26 of its potential returns per unit of risk. Regeneron Pharmaceuticals is currently generating about 0.2 per unit of risk. If you would invest  13,336  in Boeing Company on May 17, 2022 and sell it today you would earn a total of  3,711  from holding Boeing Company or generate 27.83% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Boeing Company  vs.  Regeneron Pharmaceuticals

 Performance (%) 
       Timeline  
Boeing Company 
Boeing Performance
10 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Boeing Company are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Boeing sustained solid returns over the last few months and may actually be approaching a breakup point.

Boeing Price Channel

Regeneron Pharmaceuticals 
Regeneron Performance
0 of 100
Over the last 90 days Regeneron Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, Regeneron Pharmaceuticals is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Regeneron Price Channel

Boeing and Regeneron Pharmaceuticals Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Boeing and Regeneron Pharmaceuticals

The main advantage of trading using opposite Boeing and Regeneron Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boeing position performs unexpectedly, Regeneron Pharmaceuticals 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 Regeneron Pharmaceuticals will offset losses from the drop in Regeneron Pharmaceuticals' long position.
The idea behind Boeing Company and Regeneron Pharmaceuticals 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

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