Correlation Between Merck and Immatics Biotechnologies
Can any of the company-specific risk be diversified away by investing in both Merck and Immatics Biotechnologies 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 Immatics Biotechnologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and immatics biotechnologies GmbH, you can compare the effects of market volatilities on Merck and Immatics Biotechnologies 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 Immatics Biotechnologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Immatics Biotechnologies.
Diversification Opportunities for Merck and Immatics Biotechnologies
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Merck and Immatics is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and immatics biotechnologies GmbH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Immatics Biotechnologies 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 Immatics Biotechnologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Immatics Biotechnologies has no effect on the direction of Merck i.e., Merck and Immatics Biotechnologies go up and down completely randomly.
Pair Corralation between Merck and Immatics Biotechnologies
Considering the 90-day investment horizon Merck is expected to generate 1820.46 times less return on investment than Immatics Biotechnologies. But when comparing it to its historical volatility, Merck Company is 86.51 times less risky than Immatics Biotechnologies. It trades about 0.0 of its potential returns per unit of risk. immatics biotechnologies GmbH is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 315.00 in immatics biotechnologies GmbH on August 25, 2024 and sell it today you would lose (275.00) from holding immatics biotechnologies GmbH or give up 87.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 86.55% |
| Values | Daily Returns |
Merck Company vs. immatics biotechnologies GmbH
Performance |
| Timeline |
| Merck Company |
| Immatics Biotechnologies |
Merck and Immatics Biotechnologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Immatics Biotechnologies
The main advantage of trading using opposite Merck and Immatics Biotechnologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Immatics Biotechnologies 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 Immatics Biotechnologies will offset losses from the drop in Immatics Biotechnologies' long position.The idea behind Merck Company and immatics biotechnologies GmbH 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.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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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