Correlation Between Merck and Oncolytics Biotech
Can any of the company-specific risk be diversified away by investing in both Merck and Oncolytics Biotech 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 Oncolytics Biotech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Oncolytics Biotech, you can compare the effects of market volatilities on Merck and Oncolytics Biotech 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 Oncolytics Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Oncolytics Biotech.
Diversification Opportunities for Merck and Oncolytics Biotech
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Merck and Oncolytics is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Oncolytics Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oncolytics Biotech 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 Oncolytics Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oncolytics Biotech has no effect on the direction of Merck i.e., Merck and Oncolytics Biotech go up and down completely randomly.
Pair Corralation between Merck and Oncolytics Biotech
Considering the 90-day investment horizon Merck Company is expected to generate 0.38 times more return on investment than Oncolytics Biotech. However, Merck Company is 2.6 times less risky than Oncolytics Biotech. It trades about -0.1 of its potential returns per unit of risk. Oncolytics Biotech is currently generating about -0.34 per unit of risk. If you would invest 10,423 in Merck Company on August 27, 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 Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merck Company vs. Oncolytics Biotech
Performance |
| Timeline |
| Merck Company |
| Oncolytics Biotech |
Merck and Oncolytics Biotech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Oncolytics Biotech
The main advantage of trading using opposite Merck and Oncolytics Biotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Oncolytics Biotech 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 Oncolytics Biotech will offset losses from the drop in Oncolytics Biotech's long position.| Merck vs. Capricor Therapeutics | Merck vs. Soleno Therapeutics | Merck vs. Bio Path Holdings | Merck vs. Moleculin Biotech |
| Oncolytics Biotech vs. Scpharmaceuticals | Oncolytics Biotech vs. Milestone Pharmaceuticals | Oncolytics Biotech vs. Seres Therapeutics | Oncolytics Biotech vs. DiaMedica Therapeutics |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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