Correlation Between Horizon Pharma and Merck
Can any of the company-specific risk be diversified away by investing in both Horizon Pharma 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 Horizon Pharma and Merck into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Horizon Pharma PLC and Merck Company, you can compare the effects of market volatilities on Horizon Pharma 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 Horizon Pharma with a short position of Merck. Check out your portfolio center. Please also check ongoing floating volatility patterns of Horizon Pharma and Merck.
Diversification Opportunities for Horizon Pharma and Merck
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Horizon and Merck is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Horizon Pharma PLC and Merck Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merck Company and Horizon Pharma 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 Horizon Pharma PLC 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 Horizon Pharma i.e., Horizon Pharma and Merck go up and down completely randomly.
Pair Corralation between Horizon Pharma and Merck
If you would invest (100.00) in Horizon Pharma PLC on August 29, 2024 and sell it today you would earn a total of 100.00 from holding Horizon Pharma PLC or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 0.0% |
| Values | Daily Returns |
Horizon Pharma PLC vs. Merck Company
Performance |
| Timeline |
| Horizon Pharma PLC |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Merck Company |
Horizon Pharma and Merck Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Horizon Pharma and Merck
The main advantage of trading using opposite Horizon Pharma and Merck positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Horizon Pharma 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.| Horizon Pharma vs. Bristol Myers Squibb | Horizon Pharma vs. AbbVie Inc | Horizon Pharma vs. Merck Company | Horizon Pharma vs. Gilead Sciences |
| Merck vs. Pharvaris BV | Merck vs. Brinker International | Merck vs. Alcoa Corp | Merck vs. Direxion Daily FTSE |
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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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