Correlation Between Mereo BioPharma and Annexon
Can any of the company-specific risk be diversified away by investing in both Mereo BioPharma and Annexon 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 Mereo BioPharma and Annexon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mereo BioPharma Group and Annexon, you can compare the effects of market volatilities on Mereo BioPharma and Annexon 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 Mereo BioPharma with a short position of Annexon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mereo BioPharma and Annexon.
Diversification Opportunities for Mereo BioPharma and Annexon
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Mereo and Annexon is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Mereo BioPharma Group and Annexon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Annexon and Mereo BioPharma 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 Mereo BioPharma Group are associated (or correlated) with Annexon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Annexon has no effect on the direction of Mereo BioPharma i.e., Mereo BioPharma and Annexon go up and down completely randomly.
Pair Corralation between Mereo BioPharma and Annexon
Given the investment horizon of 90 days Mereo BioPharma Group is expected to generate 1.26 times more return on investment than Annexon. However, Mereo BioPharma is 1.26 times more volatile than Annexon. It trades about -0.18 of its potential returns per unit of risk. Annexon is currently generating about -0.42 per unit of risk. If you would invest 428.00 in Mereo BioPharma Group on September 2, 2024 and sell it today you would lose (67.00) from holding Mereo BioPharma Group or give up 15.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mereo BioPharma Group vs. Annexon
Performance |
| Timeline |
| Mereo BioPharma Group |
| Annexon |
Mereo BioPharma and Annexon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mereo BioPharma and Annexon
The main advantage of trading using opposite Mereo BioPharma and Annexon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mereo BioPharma position performs unexpectedly, Annexon 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 Annexon will offset losses from the drop in Annexon's long position.| Mereo BioPharma vs. Terns Pharmaceuticals | Mereo BioPharma vs. PDS Biotechnology Corp | Mereo BioPharma vs. Inozyme Pharma | Mereo BioPharma vs. Hookipa Pharma |
| Annexon vs. Immix Biopharma | Annexon vs. Cns Pharmaceuticals | Annexon vs. Hepion Pharmaceuticals | Annexon vs. Day One Biopharmaceuticals |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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