Correlation Between Merck and Inovio Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Merck and Inovio Pharmaceuticals 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 Inovio Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Inovio Pharmaceuticals, you can compare the effects of market volatilities on Merck and Inovio Pharmaceuticals 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 Inovio Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Inovio Pharmaceuticals.
Diversification Opportunities for Merck and Inovio Pharmaceuticals
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Merck and Inovio is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Inovio Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inovio Pharmaceuticals 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 Inovio Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inovio Pharmaceuticals has no effect on the direction of Merck i.e., Merck and Inovio Pharmaceuticals go up and down completely randomly.
Pair Corralation between Merck and Inovio Pharmaceuticals
Considering the 90-day investment horizon Merck Company is expected to generate 0.23 times more return on investment than Inovio Pharmaceuticals. However, Merck Company is 4.43 times less risky than Inovio Pharmaceuticals. It trades about 0.0 of its potential returns per unit of risk. Inovio Pharmaceuticals is currently generating about -0.04 per unit of risk. If you would invest 10,432 in Merck Company on August 26, 2024 and sell it today you would lose (514.00) from holding Merck Company or give up 4.93% 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. Inovio Pharmaceuticals
Performance |
| Timeline |
| Merck Company |
| Inovio Pharmaceuticals |
Merck and Inovio Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Inovio Pharmaceuticals
The main advantage of trading using opposite Merck and Inovio Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Inovio Pharmaceuticals 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 Inovio Pharmaceuticals will offset losses from the drop in Inovio Pharmaceuticals' long position.| Merck vs. Capricor Therapeutics | Merck vs. Akari Therapeutics PLC | Merck vs. Soleno Therapeutics | Merck vs. Bio Path Holdings |
| Inovio Pharmaceuticals vs. Novavax | Inovio Pharmaceuticals vs. Vaxart Inc | Inovio Pharmaceuticals vs. Enveric Biosciences | Inovio Pharmaceuticals vs. Ocean Biomedical |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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