Correlation Between Merck and Karyopharm Therapeutics
Can any of the company-specific risk be diversified away by investing in both Merck and Karyopharm 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 Karyopharm 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 Karyopharm Therapeutics, you can compare the effects of market volatilities on Merck and Karyopharm 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 Karyopharm Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Karyopharm Therapeutics.
Diversification Opportunities for Merck and Karyopharm Therapeutics
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Merck and Karyopharm is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Karyopharm Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Karyopharm 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 Karyopharm Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Karyopharm Therapeutics has no effect on the direction of Merck i.e., Merck and Karyopharm Therapeutics go up and down completely randomly.
Pair Corralation between Merck and Karyopharm Therapeutics
Considering the 90-day investment horizon Merck Company is expected to under-perform the Karyopharm Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Merck Company is 4.32 times less risky than Karyopharm Therapeutics. The stock trades about -0.03 of its potential returns per unit of risk. The Karyopharm Therapeutics is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 90.00 in Karyopharm Therapeutics on August 29, 2024 and sell it today you would lose (2.00) from holding Karyopharm Therapeutics or give up 2.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merck Company vs. Karyopharm Therapeutics
Performance |
| Timeline |
| Merck Company |
| Karyopharm Therapeutics |
Merck and Karyopharm Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Karyopharm Therapeutics
The main advantage of trading using opposite Merck and Karyopharm Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Karyopharm 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 Karyopharm Therapeutics will offset losses from the drop in Karyopharm Therapeutics' long position.| Merck vs. Pharvaris BV | Merck vs. Brinker International | Merck vs. Alcoa Corp | Merck vs. Direxion Daily FTSE |
| Karyopharm Therapeutics vs. X4 Pharmaceuticals | Karyopharm Therapeutics vs. Hookipa Pharma | Karyopharm Therapeutics vs. Mereo BioPharma Group | Karyopharm Therapeutics vs. Acumen 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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