Correlation Between Merck and Inozyme Pharma
Can any of the company-specific risk be diversified away by investing in both Merck and Inozyme Pharma 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 Inozyme Pharma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Inozyme Pharma, you can compare the effects of market volatilities on Merck and Inozyme Pharma 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 Inozyme Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Inozyme Pharma.
Diversification Opportunities for Merck and Inozyme Pharma
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Merck and Inozyme is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Inozyme Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inozyme Pharma 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 Inozyme Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inozyme Pharma has no effect on the direction of Merck i.e., Merck and Inozyme Pharma go up and down completely randomly.
Pair Corralation between Merck and Inozyme Pharma
Considering the 90-day investment horizon Merck Company is expected to generate 0.34 times more return on investment than Inozyme Pharma. However, Merck Company is 2.97 times less risky than Inozyme Pharma. It trades about -0.18 of its potential returns per unit of risk. Inozyme Pharma is currently generating about -0.66 per unit of risk. If you would invest 10,423 in Merck Company on August 27, 2024 and sell it today you would lose (505.00) from holding Merck Company or give up 4.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merck Company vs. Inozyme Pharma
Performance |
| Timeline |
| Merck Company |
| Inozyme Pharma |
Merck and Inozyme Pharma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Inozyme Pharma
The main advantage of trading using opposite Merck and Inozyme Pharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Inozyme Pharma 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 Inozyme Pharma will offset losses from the drop in Inozyme Pharma's long position.| Merck vs. Capricor Therapeutics | Merck vs. Soleno Therapeutics | Merck vs. Bio Path Holdings | Merck vs. Moleculin Biotech |
| Inozyme Pharma vs. Eliem Therapeutics | Inozyme Pharma vs. HCW Biologics | Inozyme Pharma vs. Scpharmaceuticals | Inozyme Pharma vs. Milestone Pharmaceuticals |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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