Correlation Between Regeneron Pharmaceuticals and LithiumBank Resources

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

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

Diversification Opportunities for Regeneron Pharmaceuticals and LithiumBank Resources

0.94

Correlation Coefficient

Regeneron Pharmaceuticals  LithiumBank Resources

Almost no diversification

The 3 months correlation between Regeneron and LithiumBank is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Regeneron Pharmaceuticals and LithiumBank Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LithiumBank Resources 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 LithiumBank Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LithiumBank Resources has no effect on the direction of Regeneron Pharmaceuticals i.e., Regeneron Pharmaceuticals and LithiumBank Resources go up and down completely randomly.

Pair Corralation between Regeneron Pharmaceuticals and LithiumBank Resources

Given the investment horizon of 90 days Regeneron Pharmaceuticals is expected to generate 0.48 times more return on investment than LithiumBank Resources. However, Regeneron Pharmaceuticals is 2.09 times less risky than LithiumBank Resources. It trades about -0.39 of its potential returns per unit of risk. LithiumBank Resources Corp is currently generating about -0.21 per unit of risk. If you would invest  115,308  in Regeneron Pharmaceuticals on September 14, 2024 and sell it today you would lose (42,214) from holding Regeneron Pharmaceuticals or give up 36.61% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.44%
Values	Daily Returns

Regeneron Pharmaceuticals  vs.  LithiumBank Resources Corp

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 January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

LithiumBank Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LithiumBank Resources Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's forward-looking signals remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Regeneron Pharmaceuticals and LithiumBank Resources

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

The idea behind Regeneron Pharmaceuticals and LithiumBank Resources Corp 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.