Correlation Between Merck and Supernus Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Merck and Supernus 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 Supernus 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 Supernus Pharmaceuticals, you can compare the effects of market volatilities on Merck and Supernus 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 Supernus Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Supernus Pharmaceuticals.
Diversification Opportunities for Merck and Supernus Pharmaceuticals
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Merck and Supernus is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Supernus Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Supernus 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 Supernus Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Supernus Pharmaceuticals has no effect on the direction of Merck i.e., Merck and Supernus Pharmaceuticals go up and down completely randomly.
Pair Corralation between Merck and Supernus Pharmaceuticals
Considering the 90-day investment horizon Merck Company is expected to under-perform the Supernus Pharmaceuticals. But the stock apears to be less risky and, when comparing its historical volatility, Merck Company is 1.95 times less risky than Supernus Pharmaceuticals. The stock trades about -0.1 of its potential returns per unit of risk. The Supernus Pharmaceuticals is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 3,416 in Supernus Pharmaceuticals on August 28, 2024 and sell it today you would earn a total of 194.00 from holding Supernus Pharmaceuticals or generate 5.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merck Company vs. Supernus Pharmaceuticals
Performance |
| Timeline |
| Merck Company |
| Supernus Pharmaceuticals |
Merck and Supernus Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Supernus Pharmaceuticals
The main advantage of trading using opposite Merck and Supernus Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Supernus 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 Supernus Pharmaceuticals will offset losses from the drop in Supernus Pharmaceuticals' long position.| Merck vs. Capricor Therapeutics | Merck vs. Soleno Therapeutics | Merck vs. Bio Path Holdings | Merck vs. Moleculin Biotech |
| Supernus Pharmaceuticals vs. Prestige Brand Holdings | Supernus Pharmaceuticals vs. Evotec SE ADR | Supernus Pharmaceuticals vs. Collegium Pharmaceutical | Supernus Pharmaceuticals vs. ANI 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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