Correlation Between Equillium and Merck
Can any of the company-specific risk be diversified away by investing in both Equillium 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 Equillium and Merck into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equillium and Merck Company, you can compare the effects of market volatilities on Equillium 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 Equillium with a short position of Merck. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equillium and Merck.
Diversification Opportunities for Equillium and Merck
Poor diversification
The 3 months correlation between Equillium and Merck is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Equillium and Merck Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merck Company and Equillium 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 Equillium 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 Equillium i.e., Equillium and Merck go up and down completely randomly.
Pair Corralation between Equillium and Merck
Allowing for the 90-day total investment horizon Equillium is expected to under-perform the Merck. In addition to that, Equillium is 2.62 times more volatile than Merck Company. It trades about -0.18 of its total potential returns per unit of risk. Merck Company is currently generating about -0.02 per unit of volatility. If you would invest 9,948 in Merck Company on November 1, 2024 and sell it today you would lose (53.00) from holding Merck Company or give up 0.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Equillium vs. Merck Company
Performance |
| Timeline |
| Equillium |
| Merck Company |
Equillium and Merck Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equillium and Merck
The main advantage of trading using opposite Equillium and Merck positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equillium 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.| Equillium vs. Lyra Therapeutics | Equillium vs. Hookipa Pharma | Equillium vs. Jasper Therapeutics | Equillium vs. Cingulate Warrants |
| Merck vs. Collegium Pharmaceutical | Merck vs. Phibro Animal Health | Merck vs. ANI Pharmaceuticals | Merck vs. Procaps Group SA |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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