Correlation Between Regeneron Pharmaceuticals and Tandem Diabetes

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

Diversification Opportunities for Regeneron Pharmaceuticals and Tandem Diabetes

0.09
  Correlation Coefficient

Significant diversification

The 3 months correlation between Regeneron and Tandem is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Regeneron Pharmaceuticals and Tandem Diabetes Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tandem Diabetes Care 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 Tandem Diabetes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tandem Diabetes Care has no effect on the direction of Regeneron Pharmaceuticals i.e., Regeneron Pharmaceuticals and Tandem Diabetes go up and down completely randomly.

Pair Corralation between Regeneron Pharmaceuticals and Tandem Diabetes

Given the investment horizon of 90 days Regeneron Pharmaceuticals is expected to under-perform the Tandem Diabetes. But the stock apears to be less risky and, when comparing its historical volatility, Regeneron Pharmaceuticals is 5.12 times less risky than Tandem Diabetes. The stock trades about -0.42 of its potential returns per unit of risk. The Tandem Diabetes Care is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  3,112  in Tandem Diabetes Care on January 17, 2024 and sell it today you would earn a total of  74.00  from holding Tandem Diabetes Care or generate 2.38% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Regeneron Pharmaceuticals  vs.  Tandem Diabetes Care

 Performance 
       Timeline  
Regeneron Pharmaceuticals 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.
Tandem Diabetes Care 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Tandem Diabetes Care are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile fundamental indicators, Tandem Diabetes displayed solid returns over the last few months and may actually be approaching a breakup point.

Regeneron Pharmaceuticals and Tandem Diabetes Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Regeneron Pharmaceuticals and Tandem Diabetes

The main advantage of trading using opposite Regeneron Pharmaceuticals and Tandem Diabetes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regeneron Pharmaceuticals position performs unexpectedly, Tandem Diabetes 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 Tandem Diabetes will offset losses from the drop in Tandem Diabetes' long position.
The idea behind Regeneron Pharmaceuticals and Tandem Diabetes Care 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.

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