Correlation Between Merck and Xeris Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Merck and Xeris 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 Xeris 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 Xeris Pharmaceuticals, you can compare the effects of market volatilities on Merck and Xeris 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 Xeris Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Xeris Pharmaceuticals.
Diversification Opportunities for Merck and Xeris Pharmaceuticals
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Merck and Xeris is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Xeris Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xeris 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 Xeris Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xeris Pharmaceuticals has no effect on the direction of Merck i.e., Merck and Xeris Pharmaceuticals go up and down completely randomly.
Pair Corralation between Merck and Xeris Pharmaceuticals
Considering the 90-day investment horizon Merck Company is expected to under-perform the Xeris Pharmaceuticals. But the stock apears to be less risky and, when comparing its historical volatility, Merck Company is 2.16 times less risky than Xeris Pharmaceuticals. The stock trades about -0.1 of its potential returns per unit of risk. The Xeris Pharmaceuticals is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 245.00 in Xeris Pharmaceuticals on August 30, 2024 and sell it today you would earn a total of 100.00 from holding Xeris Pharmaceuticals or generate 40.82% 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. Xeris Pharmaceuticals
Performance |
| Timeline |
| Merck Company |
| Xeris Pharmaceuticals |
Merck and Xeris Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Xeris Pharmaceuticals
The main advantage of trading using opposite Merck and Xeris Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Xeris 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 Xeris Pharmaceuticals will offset losses from the drop in Xeris Pharmaceuticals' long position.| Merck vs. Emergent Biosolutions | Merck vs. Bausch Health Companies | Merck vs. Neurocrine Biosciences | Merck vs. Teva Pharma Industries |
| Xeris Pharmaceuticals vs. Protalix Biotherapeutics | Xeris Pharmaceuticals vs. Seres Therapeutics | Xeris Pharmaceuticals vs. Cidara Therapeutics | Xeris Pharmaceuticals vs. Immunitybio |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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