Correlation Between Merrimack Pharmaceuticals and Instil Bio
Can any of the company-specific risk be diversified away by investing in both Merrimack Pharmaceuticals and Instil Bio 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 Instil Bio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merrimack Pharmaceuticals and Instil Bio, you can compare the effects of market volatilities on Merrimack Pharmaceuticals and Instil Bio 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 Instil Bio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merrimack Pharmaceuticals and Instil Bio.
Diversification Opportunities for Merrimack Pharmaceuticals and Instil Bio
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Merrimack and Instil is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Merrimack Pharmaceuticals and Instil Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Instil Bio 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 Instil Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Instil Bio has no effect on the direction of Merrimack Pharmaceuticals i.e., Merrimack Pharmaceuticals and Instil Bio go up and down completely randomly.
Pair Corralation between Merrimack Pharmaceuticals and Instil Bio
Given the investment horizon of 90 days Merrimack Pharmaceuticals is expected to generate 43.35 times less return on investment than Instil Bio. But when comparing it to its historical volatility, Merrimack Pharmaceuticals is 6.3 times less risky than Instil Bio. It trades about 0.01 of its potential returns per unit of risk. Instil Bio is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,780 in Instil Bio on October 25, 2024 and sell it today you would earn a total of 640.00 from holding Instil Bio or generate 35.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 23.89% |
| Values | Daily Returns |
Merrimack Pharmaceuticals vs. Instil Bio
Performance |
| Timeline |
| Merrimack Pharmaceuticals |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Instil Bio |
Merrimack Pharmaceuticals and Instil Bio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merrimack Pharmaceuticals and Instil Bio
The main advantage of trading using opposite Merrimack Pharmaceuticals and Instil Bio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merrimack Pharmaceuticals position performs unexpectedly, Instil Bio 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 Instil Bio will offset losses from the drop in Instil Bio's long position.| Merrimack Pharmaceuticals vs. Amicus Therapeutics | Merrimack Pharmaceuticals vs. Celldex Therapeutics | Merrimack Pharmaceuticals vs. Puma Biotechnology | Merrimack Pharmaceuticals vs. Agios Pharm |
| Instil Bio vs. Assembly Biosciences | Instil Bio vs. Nuvation Bio | Instil Bio vs. Achilles Therapeutics PLC | Instil Bio vs. NextCure |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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