Correlation Between Pfizer and Mereo BioPharma
Can any of the company-specific risk be diversified away by investing in both Pfizer 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 Pfizer and Mereo BioPharma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pfizer Inc and Mereo BioPharma Group, you can compare the effects of market volatilities on Pfizer 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 Pfizer with a short position of Mereo BioPharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and Mereo BioPharma.
Diversification Opportunities for Pfizer and Mereo BioPharma
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pfizer and Mereo is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc 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 Pfizer 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 Pfizer Inc 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 Pfizer i.e., Pfizer and Mereo BioPharma go up and down completely randomly.
Pair Corralation between Pfizer and Mereo BioPharma
Considering the 90-day investment horizon Pfizer Inc is expected to generate 0.39 times more return on investment than Mereo BioPharma. However, Pfizer Inc is 2.53 times less risky than Mereo BioPharma. It trades about -0.1 of its potential returns per unit of risk. Mereo BioPharma Group is currently generating about -0.1 per unit of risk. If you would invest 2,857 in Pfizer Inc on August 30, 2024 and sell it today you would lose (274.00) from holding Pfizer Inc or give up 9.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pfizer Inc vs. Mereo BioPharma Group
Performance |
| Timeline |
| Pfizer Inc |
| Mereo BioPharma Group |
Pfizer and Mereo BioPharma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pfizer and Mereo BioPharma
The main advantage of trading using opposite Pfizer and Mereo BioPharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer 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.| Pfizer vs. Johnson Johnson | Pfizer vs. RLJ Lodging Trust | Pfizer vs. Aquagold International | Pfizer vs. Stepstone Group |
| 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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