Correlation Between Merck and Crispr Therapeutics
Can any of the company-specific risk be diversified away by investing in both Merck and Crispr Therapeutics 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 Crispr Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Crispr Therapeutics AG, you can compare the effects of market volatilities on Merck and Crispr Therapeutics 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 Crispr Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Crispr Therapeutics.
Diversification Opportunities for Merck and Crispr Therapeutics
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Merck and Crispr is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Crispr Therapeutics AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crispr Therapeutics 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 Crispr Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crispr Therapeutics has no effect on the direction of Merck i.e., Merck and Crispr Therapeutics go up and down completely randomly.
Pair Corralation between Merck and Crispr Therapeutics
Considering the 90-day investment horizon Merck Company is expected to under-perform the Crispr Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Merck Company is 3.05 times less risky than Crispr Therapeutics. The stock trades about -0.22 of its potential returns per unit of risk. The Crispr Therapeutics AG is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 4,804 in Crispr Therapeutics AG on August 23, 2024 and sell it today you would lose (175.00) from holding Crispr Therapeutics AG or give up 3.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merck Company vs. Crispr Therapeutics AG
Performance |
| Timeline |
| Merck Company |
| Crispr Therapeutics |
Merck and Crispr Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Crispr Therapeutics
The main advantage of trading using opposite Merck and Crispr Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Crispr Therapeutics 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 Crispr Therapeutics will offset losses from the drop in Crispr Therapeutics' long position.| Merck vs. Johnson Johnson | Merck vs. Small Cap Core | Merck vs. Freedom Holding Corp | Merck vs. Gfl Environmental Holdings |
| Crispr Therapeutics vs. Beam Therapeutics | Crispr Therapeutics vs. Editas Medicine | Crispr Therapeutics vs. Caribou Biosciences | Crispr Therapeutics vs. Verve 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 Stocks Directory module to find actively traded stocks across global markets.
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