Correlation Between Regeneron Pharmaceuticals and Crispr Therapeutics

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

By analyzing existing cross correlation between Regeneron Pharmaceuticals and Crispr Therapeutics AG, you can compare the effects of market volatilities on Regeneron Pharmaceuticals and Crispr Therapeutics 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 Crispr Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regeneron Pharmaceuticals and Crispr Therapeutics.

Diversification Opportunities for Regeneron Pharmaceuticals and Crispr Therapeutics

0.83

Correlation Coefficient

Regeneron Pharmaceuticals  Crispr Therapeutics

Very poor diversification

The 3 months correlation between Regeneron and Crispr is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Regeneron Pharmaceuticals and Crispr Therapeutics AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crispr Therapeutics 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 Crispr Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crispr Therapeutics has no effect on the direction of Regeneron Pharmaceuticals i.e., Regeneron Pharmaceuticals and Crispr Therapeutics go up and down completely randomly.

Pair Corralation between Regeneron Pharmaceuticals and Crispr Therapeutics

Given the investment horizon of 90 days Regeneron Pharmaceuticals is expected to generate 0.35 times more return on investment than Crispr Therapeutics. However, Regeneron Pharmaceuticals is 2.84 times less risky than Crispr Therapeutics. It trades about -0.52 of its potential returns per unit of risk. Crispr Therapeutics AG is currently generating about -0.38 per unit of risk. If you would invest  96,931  in Regeneron Pharmaceuticals on January 30, 2024 and sell it today you would lose (8,611) from holding Regeneron Pharmaceuticals or give up 8.88% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.45%
Values	Daily Returns

Regeneron Pharmaceuticals  vs.  Crispr Therapeutics AG

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 latest weak performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Crispr Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crispr Therapeutics AG has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unfluctuating performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Regeneron Pharmaceuticals and Crispr Therapeutics

The main advantage of trading using opposite Regeneron Pharmaceuticals and Crispr Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regeneron Pharmaceuticals position performs unexpectedly, Crispr Therapeutics 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 Crispr Therapeutics will offset losses from the drop in Crispr Therapeutics' long position.

The idea behind Regeneron Pharmaceuticals and Crispr Therapeutics AG 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.