Correlation Between Inozyme Pharma and Merrimack Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Inozyme Pharma and Merrimack Pharmaceuticals 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 Inozyme Pharma and Merrimack Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inozyme Pharma and Merrimack Pharmaceuticals, you can compare the effects of market volatilities on Inozyme Pharma and Merrimack Pharmaceuticals 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 Inozyme Pharma with a short position of Merrimack Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inozyme Pharma and Merrimack Pharmaceuticals.
Diversification Opportunities for Inozyme Pharma and Merrimack Pharmaceuticals
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Inozyme and Merrimack is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Inozyme Pharma and Merrimack Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merrimack Pharmaceuticals and Inozyme 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 Inozyme Pharma are associated (or correlated) with Merrimack Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merrimack Pharmaceuticals has no effect on the direction of Inozyme Pharma i.e., Inozyme Pharma and Merrimack Pharmaceuticals go up and down completely randomly.
Pair Corralation between Inozyme Pharma and Merrimack Pharmaceuticals
Given the investment horizon of 90 days Inozyme Pharma is expected to generate 4.13 times more return on investment than Merrimack Pharmaceuticals. However, Inozyme Pharma is 4.13 times more volatile than Merrimack Pharmaceuticals. It trades about 0.04 of its potential returns per unit of risk. Merrimack Pharmaceuticals is currently generating about 0.0 per unit of risk. If you would invest 186.00 in Inozyme Pharma on August 28, 2024 and sell it today you would earn a total of 78.00 from holding Inozyme Pharma or generate 41.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 28.78% |
| Values | Daily Returns |
Inozyme Pharma vs. Merrimack Pharmaceuticals
Performance |
| Timeline |
| Inozyme Pharma |
| Merrimack Pharmaceuticals |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Inozyme Pharma and Merrimack Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inozyme Pharma and Merrimack Pharmaceuticals
The main advantage of trading using opposite Inozyme Pharma and Merrimack Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inozyme Pharma position performs unexpectedly, Merrimack Pharmaceuticals 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 Merrimack Pharmaceuticals will offset losses from the drop in Merrimack Pharmaceuticals' long position.| Inozyme Pharma vs. Day One Biopharmaceuticals | Inozyme Pharma vs. X4 Pharmaceuticals | Inozyme Pharma vs. Acumen Pharmaceuticals | Inozyme Pharma vs. Mereo BioPharma Group |
| Merrimack Pharmaceuticals vs. Amicus Therapeutics | Merrimack Pharmaceuticals vs. Celldex Therapeutics | Merrimack Pharmaceuticals vs. Puma Biotechnology | Merrimack Pharmaceuticals vs. Agios Pharm |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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