Correlation Between ICON PLC and Regeneron Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both ICON PLC 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 ICON PLC and Regeneron Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ICON PLC and Regeneron Pharmaceuticals, you can compare the effects of market volatilities on ICON PLC 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 ICON PLC with a short position of Regeneron Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of ICON PLC and Regeneron Pharmaceuticals.
Diversification Opportunities for ICON PLC and Regeneron Pharmaceuticals
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ICON and Regeneron is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding ICON PLC and Regeneron Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regeneron Pharmaceuticals and ICON PLC 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 ICON PLC 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 ICON PLC i.e., ICON PLC and Regeneron Pharmaceuticals go up and down completely randomly.
Pair Corralation between ICON PLC and Regeneron Pharmaceuticals
Given the investment horizon of 90 days ICON PLC is expected to under-perform the Regeneron Pharmaceuticals. In addition to that, ICON PLC is 1.46 times more volatile than Regeneron Pharmaceuticals. It trades about -0.15 of its total potential returns per unit of risk. Regeneron Pharmaceuticals is currently generating about -0.04 per unit of volatility. If you would invest 95,095 in Regeneron Pharmaceuticals on February 3, 2024 and sell it today you would lose (1,334) from holding Regeneron Pharmaceuticals or give up 1.4% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
ICON PLC vs. Regeneron Pharmaceuticals
Performance |
Timeline |
ICON PLC |
Regeneron Pharmaceuticals |
ICON PLC and Regeneron Pharmaceuticals Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with ICON PLC and Regeneron Pharmaceuticals
The main advantage of trading using opposite ICON PLC and Regeneron Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ICON PLC 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 ICON PLC 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.Regeneron Pharmaceuticals vs. Pulmatrix | Regeneron Pharmaceuticals vs. Adial Pharmaceuticals | Regeneron Pharmaceuticals vs. Jaguar Animal Health | Regeneron Pharmaceuticals vs. Acasti Pharma |
Check out your portfolio center.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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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