Correlation Between Merck and Cullinan Oncology
Can any of the company-specific risk be diversified away by investing in both Merck and Cullinan Oncology 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 Cullinan Oncology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Cullinan Oncology LLC, you can compare the effects of market volatilities on Merck and Cullinan Oncology 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 Cullinan Oncology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Cullinan Oncology.
Diversification Opportunities for Merck and Cullinan Oncology
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Merck and Cullinan is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Cullinan Oncology LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cullinan Oncology LLC 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 Cullinan Oncology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cullinan Oncology LLC has no effect on the direction of Merck i.e., Merck and Cullinan Oncology go up and down completely randomly.
Pair Corralation between Merck and Cullinan Oncology
Considering the 90-day investment horizon Merck Company is expected to generate 0.32 times more return on investment than Cullinan Oncology. However, Merck Company is 3.08 times less risky than Cullinan Oncology. It trades about -0.1 of its potential returns per unit of risk. Cullinan Oncology LLC is currently generating about -0.27 per unit of risk. If you would invest 10,423 in Merck Company on August 27, 2024 and sell it today you would lose (307.00) from holding Merck Company or give up 2.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merck Company vs. Cullinan Oncology LLC
Performance |
| Timeline |
| Merck Company |
| Cullinan Oncology LLC |
Merck and Cullinan Oncology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Cullinan Oncology
The main advantage of trading using opposite Merck and Cullinan Oncology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Cullinan Oncology 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 Cullinan Oncology will offset losses from the drop in Cullinan Oncology's long position.| Merck vs. Capricor Therapeutics | Merck vs. Soleno Therapeutics | Merck vs. Bio Path Holdings | Merck vs. Moleculin Biotech |
| Cullinan Oncology vs. Bolt Biotherapeutics | Cullinan Oncology vs. Day One Biopharmaceuticals | Cullinan Oncology vs. Lyra Therapeutics | Cullinan Oncology vs. Autolus Therapeutics |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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