Correlation Between Regeneron Pharmaceuticals and Direct Line
Can any of the company-specific risk be diversified away by investing in both Regeneron Pharmaceuticals and Direct Line 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 Direct Line into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regeneron Pharmaceuticals and Direct Line Insurance, you can compare the effects of market volatilities on Regeneron Pharmaceuticals and Direct Line 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 Direct Line. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regeneron Pharmaceuticals and Direct Line.
Diversification Opportunities for Regeneron Pharmaceuticals and Direct Line
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Regeneron and Direct is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Regeneron Pharmaceuticals and Direct Line Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direct Line Insurance 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 Direct Line. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direct Line Insurance has no effect on the direction of Regeneron Pharmaceuticals i.e., Regeneron Pharmaceuticals and Direct Line go up and down completely randomly.
Pair Corralation between Regeneron Pharmaceuticals and Direct Line
Given the investment horizon of 90 days Regeneron Pharmaceuticals is expected to generate 7.45 times less return on investment than Direct Line. But when comparing it to its historical volatility, Regeneron Pharmaceuticals is 2.22 times less risky than Direct Line. It trades about 0.01 of its potential returns per unit of risk. Direct Line Insurance is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,021 in Direct Line Insurance on September 3, 2024 and sell it today you would earn a total of 164.00 from holding Direct Line Insurance or generate 16.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.75% |
| Values | Daily Returns |
Regeneron Pharmaceuticals vs. Direct Line Insurance
Performance |
| Timeline |
| Regeneron Pharmaceuticals |
| Direct Line Insurance |
Regeneron Pharmaceuticals and Direct Line Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regeneron Pharmaceuticals and Direct Line
The main advantage of trading using opposite Regeneron Pharmaceuticals and Direct Line positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regeneron Pharmaceuticals position performs unexpectedly, Direct Line 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 Direct Line will offset losses from the drop in Direct Line's long position.| Regeneron Pharmaceuticals vs. DiaMedica Therapeutics | Regeneron Pharmaceuticals vs. Lyra Therapeutics | Regeneron Pharmaceuticals vs. Centessa Pharmaceuticals PLC |
| Direct Line vs. Lipocine | Direct Line vs. Spyre Therapeutics | Direct Line vs. Atmos Energy | Direct Line vs. Regeneron Pharmaceuticals |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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