Correlation Between Merck and Halozyme Therapeutics
Can any of the company-specific risk be diversified away by investing in both Merck and Halozyme 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 Halozyme 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 Halozyme Therapeutics, you can compare the effects of market volatilities on Merck and Halozyme 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 Halozyme Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Halozyme Therapeutics.
Diversification Opportunities for Merck and Halozyme Therapeutics
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Merck and Halozyme is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Halozyme Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Halozyme 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 Halozyme Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Halozyme Therapeutics has no effect on the direction of Merck i.e., Merck and Halozyme Therapeutics go up and down completely randomly.
Pair Corralation between Merck and Halozyme Therapeutics
Considering the 90-day investment horizon Merck is expected to generate 3.04 times less return on investment than Halozyme Therapeutics. But when comparing it to its historical volatility, Merck Company is 2.13 times less risky than Halozyme Therapeutics. It trades about 0.01 of its potential returns per unit of risk. Halozyme Therapeutics is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 5,184 in Halozyme Therapeutics on August 27, 2024 and sell it today you would lose (284.00) from holding Halozyme Therapeutics or give up 5.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merck Company vs. Halozyme Therapeutics
Performance |
| Timeline |
| Merck Company |
| Halozyme Therapeutics |
Merck and Halozyme Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Halozyme Therapeutics
The main advantage of trading using opposite Merck and Halozyme Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Halozyme 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 Halozyme Therapeutics will offset losses from the drop in Halozyme Therapeutics' long position.| Merck vs. Capricor Therapeutics | Merck vs. Soleno Therapeutics | Merck vs. Bio Path Holdings | Merck vs. Moleculin Biotech |
| Halozyme Therapeutics vs. Agios Pharm | Halozyme Therapeutics vs. Insmed Inc | Halozyme Therapeutics vs. Ultragenyx | Halozyme Therapeutics vs. Biomarin Pharmaceutical |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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