Correlation Between Merck and Biofrontera Warrants
Can any of the company-specific risk be diversified away by investing in both Merck and Biofrontera Warrants 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 Merck and Biofrontera Warrants into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Biofrontera Warrants, you can compare the effects of market volatilities on Merck and Biofrontera Warrants 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 Merck with a short position of Biofrontera Warrants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Biofrontera Warrants.
Diversification Opportunities for Merck and Biofrontera Warrants
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Merck and Biofrontera is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Biofrontera Warrants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biofrontera Warrants and Merck 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 Merck Company are associated (or correlated) with Biofrontera Warrants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biofrontera Warrants has no effect on the direction of Merck i.e., Merck and Biofrontera Warrants go up and down completely randomly.
Pair Corralation between Merck and Biofrontera Warrants
Considering the 90-day investment horizon Merck Company is expected to under-perform the Biofrontera Warrants. But the stock apears to be less risky and, when comparing its historical volatility, Merck Company is 70.11 times less risky than Biofrontera Warrants. The stock trades about -0.08 of its potential returns per unit of risk. The Biofrontera Warrants is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 3.90 in Biofrontera Warrants on August 29, 2024 and sell it today you would earn a total of 4.64 from holding Biofrontera Warrants or generate 118.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 90.91% |
| Values | Daily Returns |
Merck Company vs. Biofrontera Warrants
Performance |
| Timeline |
| Merck Company |
| Biofrontera Warrants |
Merck and Biofrontera Warrants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Biofrontera Warrants
The main advantage of trading using opposite Merck and Biofrontera Warrants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Biofrontera Warrants 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 Biofrontera Warrants will offset losses from the drop in Biofrontera Warrants' long position.| Merck vs. Capricor Therapeutics | Merck vs. Soleno Therapeutics | Merck vs. Bio Path Holdings | Merck vs. Moleculin Biotech |
| Biofrontera Warrants vs. Biofrontera | Biofrontera Warrants vs. Pasithea Therapeutics Corp | Biofrontera Warrants vs. Inspira Technologies Oxy | Biofrontera Warrants vs. Bluejay Diagnostics |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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