Correlation Between Regeneron Pharmaceuticals and Grocery Outlet

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

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

Diversification Opportunities for Regeneron Pharmaceuticals and Grocery Outlet

-0.32

Correlation Coefficient

Regeneron Pharmaceuticals  Grocery Outlet

Very good diversification

The 3 months correlation between Regeneron and Grocery is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Regeneron Pharmaceuticals and Grocery Outlet Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grocery Outlet Holding 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 Grocery Outlet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grocery Outlet Holding has no effect on the direction of Regeneron Pharmaceuticals i.e., Regeneron Pharmaceuticals and Grocery Outlet go up and down completely randomly.

Pair Corralation between Regeneron Pharmaceuticals and Grocery Outlet

Given the investment horizon of 90 days Regeneron Pharmaceuticals is expected to under-perform the Grocery Outlet. But the stock apears to be less risky and, when comparing its historical volatility, Regeneron Pharmaceuticals is 2.14 times less risky than Grocery Outlet. The stock trades about -0.19 of its potential returns per unit of risk. The Grocery Outlet Holding is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  2,120  in Grocery Outlet Holding on October 10, 2024 and sell it today you would lose (493.00) from holding Grocery Outlet Holding or give up 23.25% of portfolio value over 90 days.

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

Regeneron Pharmaceuticals  vs.  Grocery Outlet Holding

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.

Grocery Outlet Holding

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Grocery Outlet Holding are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Grocery Outlet may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Regeneron Pharmaceuticals and Grocery Outlet

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

The idea behind Regeneron Pharmaceuticals and Grocery Outlet Holding 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.