Correlation Between Compass Therapeutics and Merus BV
Can any of the company-specific risk be diversified away by investing in both Compass Therapeutics and Merus BV 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 Compass Therapeutics and Merus BV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compass Therapeutics and Merus BV, you can compare the effects of market volatilities on Compass Therapeutics and Merus BV 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 Compass Therapeutics with a short position of Merus BV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compass Therapeutics and Merus BV.
Diversification Opportunities for Compass Therapeutics and Merus BV
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Compass and Merus is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Compass Therapeutics and Merus BV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merus BV and Compass Therapeutics 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 Compass Therapeutics are associated (or correlated) with Merus BV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merus BV has no effect on the direction of Compass Therapeutics i.e., Compass Therapeutics and Merus BV go up and down completely randomly.
Pair Corralation between Compass Therapeutics and Merus BV
Given the investment horizon of 90 days Compass Therapeutics is expected to generate 3.57 times more return on investment than Merus BV. However, Compass Therapeutics is 3.57 times more volatile than Merus BV. It trades about 0.24 of its potential returns per unit of risk. Merus BV is currently generating about -0.09 per unit of risk. If you would invest 151.00 in Compass Therapeutics on November 4, 2024 and sell it today you would earn a total of 151.00 from holding Compass Therapeutics or generate 100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compass Therapeutics vs. Merus BV
Performance |
| Timeline |
| Compass Therapeutics |
| Merus BV |
Compass Therapeutics and Merus BV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compass Therapeutics and Merus BV
The main advantage of trading using opposite Compass Therapeutics and Merus BV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compass Therapeutics position performs unexpectedly, Merus BV 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 Merus BV will offset losses from the drop in Merus BV's long position.| Compass Therapeutics vs. Ideaya Biosciences | Compass Therapeutics vs. AnaptysBio | Compass Therapeutics vs. MeiraGTx Holdings PLC | Compass Therapeutics vs. Keros Therapeutics |
| Merus BV vs. Anebulo Pharmaceuticals | Merus BV vs. Adagene | Merus BV vs. Acrivon Therapeutics, Common | Merus BV vs. AnaptysBio |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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