Correlation Between Procter Gamble and Regeneron Pharmaceuticals

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

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

Diversification Opportunities for Procter Gamble and Regeneron Pharmaceuticals

0.05

Correlation Coefficient

Procter Gamble  Regeneron Pharmaceuticals

Significant diversification

The 3 months correlation between Procter and Regeneron is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and Regeneron Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regeneron Pharmaceuticals and Procter Gamble 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 Procter Gamble 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 Procter Gamble i.e., Procter Gamble and Regeneron Pharmaceuticals go up and down completely randomly.

Pair Corralation between Procter Gamble and Regeneron Pharmaceuticals

Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 0.64 times more return on investment than Regeneron Pharmaceuticals. However, Procter Gamble is 1.57 times less risky than Regeneron Pharmaceuticals. It trades about 0.02 of its potential returns per unit of risk. Regeneron Pharmaceuticals is currently generating about -0.07 per unit of risk. If you would invest  16,608  in Procter Gamble on December 29, 2024 and sell it today you would earn a total of  195.00  from holding Procter Gamble or generate 1.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Procter Gamble  vs.  Regeneron Pharmaceuticals

Procter Gamble

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Procter Gamble are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Procter Gamble is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Regeneron Pharmaceuticals

Risk-Adjusted Performance

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.

Pair Trading with Procter Gamble and Regeneron Pharmaceuticals

The main advantage of trading using opposite Procter Gamble and Regeneron Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble 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 Procter Gamble 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.