Correlation Between Merrimack Pharmaceuticals and Inozyme Pharma
Can any of the company-specific risk be diversified away by investing in both Merrimack Pharmaceuticals and Inozyme Pharma 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 Inozyme Pharma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merrimack Pharmaceuticals and Inozyme Pharma, you can compare the effects of market volatilities on Merrimack Pharmaceuticals and Inozyme Pharma 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 Inozyme Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merrimack Pharmaceuticals and Inozyme Pharma.
Diversification Opportunities for Merrimack Pharmaceuticals and Inozyme Pharma
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Merrimack and Inozyme is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Merrimack Pharmaceuticals and Inozyme Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inozyme Pharma 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 Inozyme Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inozyme Pharma has no effect on the direction of Merrimack Pharmaceuticals i.e., Merrimack Pharmaceuticals and Inozyme Pharma go up and down completely randomly.
Pair Corralation between Merrimack Pharmaceuticals and Inozyme Pharma
Given the investment horizon of 90 days Merrimack Pharmaceuticals is expected to generate 17.34 times less return on investment than Inozyme Pharma. But when comparing it to its historical volatility, Merrimack Pharmaceuticals is 3.5 times less risky than Inozyme Pharma. It trades about 0.01 of its potential returns per unit of risk. Inozyme Pharma is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 145.00 in Inozyme Pharma on August 28, 2024 and sell it today you would earn a total of 120.00 from holding Inozyme Pharma or generate 82.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 31.65% |
| Values | Daily Returns |
Merrimack Pharmaceuticals vs. Inozyme Pharma
Performance |
| Timeline |
| Merrimack Pharmaceuticals |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Inozyme Pharma |
Merrimack Pharmaceuticals and Inozyme Pharma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merrimack Pharmaceuticals and Inozyme Pharma
The main advantage of trading using opposite Merrimack Pharmaceuticals and Inozyme Pharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merrimack Pharmaceuticals position performs unexpectedly, Inozyme Pharma 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 Inozyme Pharma will offset losses from the drop in Inozyme Pharma's long position.| Merrimack Pharmaceuticals vs. Amicus Therapeutics | Merrimack Pharmaceuticals vs. Celldex Therapeutics | Merrimack Pharmaceuticals vs. Puma Biotechnology | Merrimack Pharmaceuticals vs. Agios Pharm |
| Inozyme Pharma vs. Day One Biopharmaceuticals | Inozyme Pharma vs. X4 Pharmaceuticals | Inozyme Pharma vs. Acumen Pharmaceuticals | Inozyme Pharma vs. Mereo BioPharma Group |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
Other Complementary Tools
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency |