Correlation Between Inhibrx and Merck
Can any of the company-specific risk be diversified away by investing in both Inhibrx 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 Inhibrx and Merck into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inhibrx and Merck Company, you can compare the effects of market volatilities on Inhibrx 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 Inhibrx with a short position of Merck. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inhibrx and Merck.
Diversification Opportunities for Inhibrx and Merck
Poor diversification
The 3 months correlation between Inhibrx and Merck is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Inhibrx and Merck Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merck Company and Inhibrx 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 Inhibrx 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 Inhibrx i.e., Inhibrx and Merck go up and down completely randomly.
Pair Corralation between Inhibrx and Merck
Given the investment horizon of 90 days Inhibrx is expected to under-perform the Merck. In addition to that, Inhibrx is 3.33 times more volatile than Merck Company. It trades about -0.05 of its total potential returns per unit of risk. Merck Company is currently generating about -0.06 per unit of volatility. If you would invest 12,318 in Merck Company on December 11, 2024 and sell it today you would lose (2,795) from holding Merck Company or give up 22.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Inhibrx vs. Merck Company
Performance |
| Timeline |
| Inhibrx |
| Merck Company |
Inhibrx and Merck Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inhibrx and Merck
The main advantage of trading using opposite Inhibrx and Merck positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inhibrx 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.| Inhibrx vs. Crinetics Pharmaceuticals | Inhibrx vs. Merus BV | Inhibrx vs. Lyell Immunopharma | Inhibrx vs. Kronos Bio |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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