Correlation Between Merrimack Pharmaceuticals and CytomX Therapeutics
Can any of the company-specific risk be diversified away by investing in both Merrimack Pharmaceuticals and CytomX Therapeutics 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 Merrimack Pharmaceuticals and CytomX Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merrimack Pharmaceuticals and CytomX Therapeutics, you can compare the effects of market volatilities on Merrimack Pharmaceuticals and CytomX Therapeutics 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 Merrimack Pharmaceuticals with a short position of CytomX Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merrimack Pharmaceuticals and CytomX Therapeutics.
Diversification Opportunities for Merrimack Pharmaceuticals and CytomX Therapeutics
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Merrimack and CytomX is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Merrimack Pharmaceuticals and CytomX Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CytomX Therapeutics and Merrimack Pharmaceuticals 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 Merrimack Pharmaceuticals are associated (or correlated) with CytomX Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CytomX Therapeutics has no effect on the direction of Merrimack Pharmaceuticals i.e., Merrimack Pharmaceuticals and CytomX Therapeutics go up and down completely randomly.
Pair Corralation between Merrimack Pharmaceuticals and CytomX Therapeutics
Given the investment horizon of 90 days Merrimack Pharmaceuticals is expected to generate 16.5 times less return on investment than CytomX Therapeutics. But when comparing it to its historical volatility, Merrimack Pharmaceuticals is 9.62 times less risky than CytomX Therapeutics. It trades about 0.01 of its potential returns per unit of risk. CytomX Therapeutics is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 265.00 in CytomX Therapeutics on October 25, 2024 and sell it today you would lose (178.22) from holding CytomX Therapeutics or give up 67.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 23.89% |
| Values | Daily Returns |
Merrimack Pharmaceuticals vs. CytomX Therapeutics
Performance |
| Timeline |
| Merrimack Pharmaceuticals |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| CytomX Therapeutics |
Merrimack Pharmaceuticals and CytomX Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merrimack Pharmaceuticals and CytomX Therapeutics
The main advantage of trading using opposite Merrimack Pharmaceuticals and CytomX Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merrimack Pharmaceuticals position performs unexpectedly, CytomX Therapeutics 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 CytomX Therapeutics will offset losses from the drop in CytomX Therapeutics' long position.| Merrimack Pharmaceuticals vs. Amicus Therapeutics | Merrimack Pharmaceuticals vs. Celldex Therapeutics | Merrimack Pharmaceuticals vs. Puma Biotechnology | Merrimack Pharmaceuticals vs. Agios Pharm |
| CytomX Therapeutics vs. Spero Therapeutics | CytomX Therapeutics vs. Instil Bio | CytomX Therapeutics vs. NextCure | CytomX Therapeutics vs. Assembly Biosciences |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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