Correlation Between Merck and Lyra Therapeutics
Can any of the company-specific risk be diversified away by investing in both Merck and Lyra 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 Lyra 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 Lyra Therapeutics, you can compare the effects of market volatilities on Merck and Lyra 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 Lyra Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Lyra Therapeutics.
Diversification Opportunities for Merck and Lyra Therapeutics
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Merck and Lyra is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Lyra Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lyra 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 Lyra Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lyra Therapeutics has no effect on the direction of Merck i.e., Merck and Lyra Therapeutics go up and down completely randomly.
Pair Corralation between Merck and Lyra Therapeutics
Considering the 90-day investment horizon Merck Company is expected to generate 0.15 times more return on investment than Lyra Therapeutics. However, Merck Company is 6.47 times less risky than Lyra Therapeutics. It trades about -0.1 of its potential returns per unit of risk. Lyra Therapeutics is currently generating about -0.1 per unit of risk. If you would invest 10,423 in Merck Company on August 28, 2024 and sell it today you would lose (307.00) from holding Merck Company or give up 2.95% 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. Lyra Therapeutics
Performance |
| Timeline |
| Merck Company |
| Lyra Therapeutics |
Merck and Lyra Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Lyra Therapeutics
The main advantage of trading using opposite Merck and Lyra Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Lyra 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 Lyra Therapeutics will offset losses from the drop in Lyra Therapeutics' long position.| Merck vs. Capricor Therapeutics | Merck vs. Soleno Therapeutics | Merck vs. Bio Path Holdings | Merck vs. Moleculin Biotech |
| Lyra Therapeutics vs. Eliem Therapeutics | Lyra Therapeutics vs. HCW Biologics | Lyra Therapeutics vs. Scpharmaceuticals | Lyra Therapeutics 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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