Correlation Between Merck and Hillevax
Can any of the company-specific risk be diversified away by investing in both Merck and Hillevax 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 Hillevax into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Hillevax, you can compare the effects of market volatilities on Merck and Hillevax 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 Hillevax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Hillevax.
Diversification Opportunities for Merck and Hillevax
Excellent diversification
The 3 months correlation between Merck and Hillevax is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Hillevax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hillevax 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 Hillevax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hillevax has no effect on the direction of Merck i.e., Merck and Hillevax go up and down completely randomly.
Pair Corralation between Merck and Hillevax
Considering the 90-day investment horizon Merck Company is expected to under-perform the Hillevax. But the stock apears to be less risky and, when comparing its historical volatility, Merck Company is 1.65 times less risky than Hillevax. The stock trades about -0.05 of its potential returns per unit of risk. The Hillevax is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 184.00 in Hillevax on August 31, 2024 and sell it today you would earn a total of 8.00 from holding Hillevax or generate 4.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merck Company vs. Hillevax
Performance |
| Timeline |
| Merck Company |
| Hillevax |
Merck and Hillevax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Hillevax
The main advantage of trading using opposite Merck and Hillevax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Hillevax 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 Hillevax will offset losses from the drop in Hillevax's long position.The idea behind Merck Company and Hillevax pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Hillevax vs. Pmv Pharmaceuticals | Hillevax vs. Eliem Therapeutics | Hillevax vs. MediciNova | Hillevax vs. Pharvaris BV |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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