Correlation Between Envista Holdings and Regeneron Pharmaceuticals

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

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

Diversification Opportunities for Envista Holdings and Regeneron Pharmaceuticals

-0.5

Correlation Coefficient

Envista Holdings  Regeneron Pharmaceuticals

Very good diversification

The 3 months correlation between Envista and Regeneron is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Envista Holdings Corp and Regeneron Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regeneron Pharmaceuticals and Envista Holdings 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 Envista Holdings Corp 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 Envista Holdings i.e., Envista Holdings and Regeneron Pharmaceuticals go up and down completely randomly.

Pair Corralation between Envista Holdings and Regeneron Pharmaceuticals

Given the investment horizon of 90 days Envista Holdings Corp is expected to generate 1.37 times more return on investment than Regeneron Pharmaceuticals. However, Envista Holdings is 1.37 times more volatile than Regeneron Pharmaceuticals. It trades about -0.08 of its potential returns per unit of risk. Regeneron Pharmaceuticals is currently generating about -0.18 per unit of risk. If you would invest  1,999  in Envista Holdings Corp on October 11, 2024 and sell it today you would lose (82.00) from holding Envista Holdings Corp or give up 4.1% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Envista Holdings Corp  vs.  Regeneron Pharmaceuticals

Envista Holdings Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Envista Holdings Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Envista Holdings may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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 weak performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Envista Holdings and Regeneron Pharmaceuticals

The main advantage of trading using opposite Envista Holdings and Regeneron Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Envista Holdings 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 Envista Holdings Corp 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.