Correlation Between Merck and Telo Genomics
Can any of the company-specific risk be diversified away by investing in both Merck and Telo Genomics 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 Telo Genomics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Telo Genomics Corp, you can compare the effects of market volatilities on Merck and Telo Genomics 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 Telo Genomics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Telo Genomics.
Diversification Opportunities for Merck and Telo Genomics
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Merck and Telo is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Telo Genomics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telo Genomics Corp 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 Telo Genomics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telo Genomics Corp has no effect on the direction of Merck i.e., Merck and Telo Genomics go up and down completely randomly.
Pair Corralation between Merck and Telo Genomics
Considering the 90-day investment horizon Merck Company is expected to under-perform the Telo Genomics. But the stock apears to be less risky and, when comparing its historical volatility, Merck Company is 14.34 times less risky than Telo Genomics. The stock trades about -0.17 of its potential returns per unit of risk. The Telo Genomics Corp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 8.80 in Telo Genomics Corp on August 26, 2024 and sell it today you would lose (1.80) from holding Telo Genomics Corp or give up 20.45% 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. Telo Genomics Corp
Performance |
| Timeline |
| Merck Company |
| Telo Genomics Corp |
Merck and Telo Genomics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Telo Genomics
The main advantage of trading using opposite Merck and Telo Genomics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Telo Genomics 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 Telo Genomics will offset losses from the drop in Telo Genomics' long position.| Merck vs. Capricor Therapeutics | Merck vs. Soleno Therapeutics | Merck vs. Bio Path Holdings | Merck vs. Moleculin Biotech |
| Telo Genomics vs. EXACT Sciences | Telo Genomics vs. Natera Inc | Telo Genomics vs. Caredx Inc | Telo Genomics vs. Illumina |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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