Correlation Between Fortress Biotech and Mereo BioPharma
Can any of the company-specific risk be diversified away by investing in both Fortress Biotech and Mereo BioPharma 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 Fortress Biotech and Mereo BioPharma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fortress Biotech and Mereo BioPharma Group, you can compare the effects of market volatilities on Fortress Biotech and Mereo BioPharma 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 Fortress Biotech with a short position of Mereo BioPharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortress Biotech and Mereo BioPharma.
Diversification Opportunities for Fortress Biotech and Mereo BioPharma
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fortress and Mereo is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Fortress Biotech and Mereo BioPharma Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mereo BioPharma Group and Fortress Biotech 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 Fortress Biotech are associated (or correlated) with Mereo BioPharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mereo BioPharma Group has no effect on the direction of Fortress Biotech i.e., Fortress Biotech and Mereo BioPharma go up and down completely randomly.
Pair Corralation between Fortress Biotech and Mereo BioPharma
Given the investment horizon of 90 days Fortress Biotech is expected to under-perform the Mereo BioPharma. In addition to that, Fortress Biotech is 1.32 times more volatile than Mereo BioPharma Group. It trades about -0.02 of its total potential returns per unit of risk. Mereo BioPharma Group is currently generating about 0.08 per unit of volatility. If you would invest 80.00 in Mereo BioPharma Group on August 29, 2024 and sell it today you would earn a total of 260.00 from holding Mereo BioPharma Group or generate 325.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fortress Biotech vs. Mereo BioPharma Group
Performance |
| Timeline |
| Fortress Biotech |
| Mereo BioPharma Group |
Fortress Biotech and Mereo BioPharma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortress Biotech and Mereo BioPharma
The main advantage of trading using opposite Fortress Biotech and Mereo BioPharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortress Biotech position performs unexpectedly, Mereo BioPharma 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 Mereo BioPharma will offset losses from the drop in Mereo BioPharma's long position.| Fortress Biotech vs. Mustang Bio | Fortress Biotech vs. Achilles Therapeutics PLC | Fortress Biotech vs. Aptose Biosciences | Fortress Biotech vs. Fortress Biotech Pref |
| Mereo BioPharma vs. Eliem Therapeutics | Mereo BioPharma vs. Scpharmaceuticals | Mereo BioPharma vs. Milestone Pharmaceuticals | Mereo BioPharma vs. Seres Therapeutics |
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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