Correlation Between NextCure and Mereo BioPharma
Can any of the company-specific risk be diversified away by investing in both NextCure and Mereo BioPharma 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 NextCure and Mereo BioPharma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NextCure and Mereo BioPharma Group, you can compare the effects of market volatilities on NextCure and Mereo BioPharma 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 NextCure with a short position of Mereo BioPharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of NextCure and Mereo BioPharma.
Diversification Opportunities for NextCure and Mereo BioPharma
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NextCure and Mereo is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding NextCure and Mereo BioPharma Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mereo BioPharma Group and NextCure 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 NextCure are associated (or correlated) with Mereo BioPharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mereo BioPharma Group has no effect on the direction of NextCure i.e., NextCure and Mereo BioPharma go up and down completely randomly.
Pair Corralation between NextCure and Mereo BioPharma
Given the investment horizon of 90 days NextCure is expected to under-perform the Mereo BioPharma. In addition to that, NextCure is 1.06 times more volatile than Mereo BioPharma Group. It trades about -0.16 of its total potential returns per unit of risk. Mereo BioPharma Group is currently generating about -0.1 per unit of volatility. If you would invest 426.00 in Mereo BioPharma Group on November 8, 2024 and sell it today you would lose (116.00) from holding Mereo BioPharma Group or give up 27.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NextCure vs. Mereo BioPharma Group
Performance |
| Timeline |
| NextCure |
| Mereo BioPharma Group |
NextCure and Mereo BioPharma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NextCure and Mereo BioPharma
The main advantage of trading using opposite NextCure and Mereo BioPharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NextCure position performs unexpectedly, Mereo BioPharma 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 Mereo BioPharma will offset losses from the drop in Mereo BioPharma's long position.| NextCure vs. CytomX Therapeutics | NextCure vs. Spero Therapeutics | NextCure vs. Instil Bio | NextCure vs. Assembly Biosciences |
| Mereo BioPharma vs. Terns Pharmaceuticals | Mereo BioPharma vs. PDS Biotechnology Corp | Mereo BioPharma vs. Inozyme Pharma | Mereo BioPharma vs. Hookipa Pharma |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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