Correlation Between Regeneron Pharmaceuticals and Rocky Brands

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

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

Diversification Opportunities for Regeneron Pharmaceuticals and Rocky Brands

0.65

Correlation Coefficient

Regeneron Pharmaceuticals  Rocky Brands

Poor diversification

The 3 months correlation between Regeneron and Rocky is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Regeneron Pharmaceuticals and Rocky Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rocky Brands 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 Rocky Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rocky Brands has no effect on the direction of Regeneron Pharmaceuticals i.e., Regeneron Pharmaceuticals and Rocky Brands go up and down completely randomly.

Pair Corralation between Regeneron Pharmaceuticals and Rocky Brands

Given the investment horizon of 90 days Regeneron Pharmaceuticals is expected to under-perform the Rocky Brands. But the stock apears to be less risky and, when comparing its historical volatility, Regeneron Pharmaceuticals is 2.97 times less risky than Rocky Brands. The stock trades about -0.01 of its potential returns per unit of risk. The Rocky Brands is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  2,893  in Rocky Brands on October 26, 2024 and sell it today you would lose (338.00) from holding Rocky Brands or give up 11.68% 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.  Rocky Brands

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.

Rocky Brands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rocky Brands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward-looking signals, Rocky Brands is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Regeneron Pharmaceuticals and Rocky Brands

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

The idea behind Regeneron Pharmaceuticals and Rocky Brands 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.