Correlation Between Novan and Regeneron Pharmaceuticals

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

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

Diversification Opportunities for Novan and Regeneron Pharmaceuticals

-0.08

Correlation Coefficient

Novan  Regeneron Pharmaceuticals

Good diversification

The 3 months correlation between Novan and Regeneron is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Novan Inc and Regeneron Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regeneron Pharmaceuticals and Novan 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 Novan Inc 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 Novan i.e., Novan and Regeneron Pharmaceuticals go up and down completely randomly.

Pair Corralation between Novan and Regeneron Pharmaceuticals

Given the investment horizon of 90 days Novan Inc is expected to under-perform the Regeneron Pharmaceuticals. In addition to that, Novan is 5.74 times more volatile than Regeneron Pharmaceuticals. It trades about -0.06 of its total potential returns per unit of risk. Regeneron Pharmaceuticals is currently generating about 0.04 per unit of volatility. If you would invest  66,086  in Regeneron Pharmaceuticals on January 24, 2024 and sell it today you would earn a total of  23,930  from holding Regeneron Pharmaceuticals or generate 36.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	71.26%
Values	Daily Returns

Novan Inc  vs.  Regeneron Pharmaceuticals

Novan Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Novan Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Novan is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

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 very healthy technical and fundamental indicators, Regeneron Pharmaceuticals is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Novan and Regeneron Pharmaceuticals

The main advantage of trading using opposite Novan and Regeneron Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novan 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 Novan Inc 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.

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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.