Correlation Between Omeros and Merck
Can any of the company-specific risk be diversified away by investing in both Omeros and Merck 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 Omeros and Merck into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Omeros and Merck Company, you can compare the effects of market volatilities on Omeros and Merck 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 Omeros with a short position of Merck. Check out your portfolio center. Please also check ongoing floating volatility patterns of Omeros and Merck.
Diversification Opportunities for Omeros and Merck
Pay attention - limited upside
The 3 months correlation between Omeros and Merck is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Omeros and Merck Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merck Company and Omeros 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 Omeros are associated (or correlated) with Merck. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merck Company has no effect on the direction of Omeros i.e., Omeros and Merck go up and down completely randomly.
Pair Corralation between Omeros and Merck
Assuming the 90 days horizon Omeros is expected to generate 12.78 times more return on investment than Merck. However, Omeros is 12.78 times more volatile than Merck Company. It trades about 0.05 of its potential returns per unit of risk. Merck Company is currently generating about 0.01 per unit of risk. If you would invest 1,086 in Omeros on October 7, 2024 and sell it today you would lose (17.00) from holding Omeros or give up 1.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Omeros vs. Merck Company
Performance |
| Timeline |
| Omeros |
| Merck Company |
Omeros and Merck Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Omeros and Merck
The main advantage of trading using opposite Omeros and Merck positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Omeros position performs unexpectedly, Merck 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 Merck will offset losses from the drop in Merck's long position.| Omeros vs. Treasury Wine Estates | Omeros vs. CHINA TONTINE WINES | Omeros vs. Virtus Investment Partners | Omeros vs. Japan Post Insurance |
| Merck vs. Superior Plus Corp | Merck vs. NMI Holdings | Merck vs. SIVERS SEMICONDUCTORS AB | Merck vs. Talanx AG |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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