Correlation Between Regeneron Pharmaceuticals and Nuvalent

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

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

Diversification Opportunities for Regeneron Pharmaceuticals and Nuvalent

0.72

Correlation Coefficient

Regeneron Pharmaceuticals  Nuvalent

Poor diversification

The 3 months correlation between Regeneron and Nuvalent is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Regeneron Pharmaceuticals and Nuvalent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuvalent 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 Nuvalent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuvalent has no effect on the direction of Regeneron Pharmaceuticals i.e., Regeneron Pharmaceuticals and Nuvalent go up and down completely randomly.

Pair Corralation between Regeneron Pharmaceuticals and Nuvalent

Given the investment horizon of 90 days Regeneron Pharmaceuticals is expected to generate 0.75 times more return on investment than Nuvalent. However, Regeneron Pharmaceuticals is 1.34 times less risky than Nuvalent. It trades about -0.08 of its potential returns per unit of risk. Nuvalent is currently generating about -0.09 per unit of risk. If you would invest  74,460  in Regeneron Pharmaceuticals on November 19, 2024 and sell it today you would lose (7,100) from holding Regeneron Pharmaceuticals or give up 9.54% of portfolio value over 90 days.

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

Regeneron Pharmaceuticals  vs.  Nuvalent

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.

Nuvalent

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nuvalent has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in March 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Regeneron Pharmaceuticals and Nuvalent

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

The idea behind Regeneron Pharmaceuticals and Nuvalent 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..