Correlation Between Merus BV and Erasca
Can any of the company-specific risk be diversified away by investing in both Merus BV and Erasca 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 Merus BV and Erasca into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merus BV and Erasca Inc, you can compare the effects of market volatilities on Merus BV and Erasca 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 Merus BV with a short position of Erasca. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merus BV and Erasca.
Diversification Opportunities for Merus BV and Erasca
Modest diversification
The 3 months correlation between Merus and Erasca is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Merus BV and Erasca Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erasca Inc and Merus BV 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 Merus BV are associated (or correlated) with Erasca. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Erasca Inc has no effect on the direction of Merus BV i.e., Merus BV and Erasca go up and down completely randomly.
Pair Corralation between Merus BV and Erasca
Given the investment horizon of 90 days Merus BV is expected to under-perform the Erasca. But the stock apears to be less risky and, when comparing its historical volatility, Merus BV is 1.57 times less risky than Erasca. The stock trades about -0.24 of its potential returns per unit of risk. The Erasca Inc is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 264.00 in Erasca Inc on August 29, 2024 and sell it today you would earn a total of 14.00 from holding Erasca Inc or generate 5.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merus BV vs. Erasca Inc
Performance |
| Timeline |
| Merus BV |
| Erasca Inc |
Merus BV and Erasca Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merus BV and Erasca
The main advantage of trading using opposite Merus BV and Erasca positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merus BV position performs unexpectedly, Erasca 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 Erasca will offset losses from the drop in Erasca's long position.| Merus BV vs. Anebulo Pharmaceuticals | Merus BV vs. Adagene | Merus BV vs. Acrivon Therapeutics, Common | Merus BV vs. AnaptysBio |
| Erasca vs. Eliem Therapeutics | Erasca vs. Scpharmaceuticals | Erasca vs. Milestone Pharmaceuticals | Erasca vs. Seres 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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