Correlation Between Regeneron Pharmaceuticals and Vertex Pharmaceutic

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

Diversification Opportunities for Regeneron Pharmaceuticals and Vertex Pharmaceutic

0.35
  Correlation Coefficient

Weak diversification

The 3 months correlation between Regeneron and Vertex is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Regeneron Pharmaceuticals and Vertex Pharmaceutic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vertex Pharmaceutic 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 Vertex Pharmaceutic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vertex Pharmaceutic has no effect on the direction of Regeneron Pharmaceuticals i.e., Regeneron Pharmaceuticals and Vertex Pharmaceutic go up and down completely randomly.

Pair Corralation between Regeneron Pharmaceuticals and Vertex Pharmaceutic

Given the investment horizon of 90 days Regeneron Pharmaceuticals is expected to generate 5.75 times less return on investment than Vertex Pharmaceutic. But when comparing it to its historical volatility, Regeneron Pharmaceuticals is 1.03 times less risky than Vertex Pharmaceutic. It trades about 0.02 of its potential returns per unit of risk. Vertex Pharmaceutic is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  19,834  in Vertex Pharmaceutic on April 7, 2022 and sell it today you would earn a total of  9,282  from holding Vertex Pharmaceutic or generate 46.8% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Regeneron Pharmaceuticals  vs.  Vertex Pharmaceutic

 Performance (%) 
      Timeline 
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 unsteady performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in August 2022. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Regeneron Price Channel

Vertex Pharmaceutic 
Vertex Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Vertex Pharmaceutic are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Vertex Pharmaceutic may actually be approaching a critical reversion point that can send shares even higher in August 2022.

Structure and Payout Changes

Last Split Factor
2:1
Last Split Date
2000-08-24

Vertex Price Channel

Regeneron Pharmaceuticals and Vertex Pharmaceutic Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Regeneron Pharmaceuticals and Vertex Pharmaceutic

The main advantage of trading using opposite Regeneron Pharmaceuticals and Vertex Pharmaceutic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regeneron Pharmaceuticals position performs unexpectedly, Vertex Pharmaceutic 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 Vertex Pharmaceutic will offset losses from the drop in Vertex Pharmaceutic's long position.
The idea behind Regeneron Pharmaceuticals and Vertex Pharmaceutic 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.

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