Correlation Between Stoke Therapeutics and Merus BV
Can any of the company-specific risk be diversified away by investing in both Stoke Therapeutics and Merus BV 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 Stoke Therapeutics and Merus BV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stoke Therapeutics and Merus BV, you can compare the effects of market volatilities on Stoke Therapeutics and Merus BV 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 Stoke Therapeutics with a short position of Merus BV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stoke Therapeutics and Merus BV.
Diversification Opportunities for Stoke Therapeutics and Merus BV
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Stoke and Merus is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Stoke Therapeutics and Merus BV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merus BV and Stoke Therapeutics 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 Stoke Therapeutics are associated (or correlated) with Merus BV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merus BV has no effect on the direction of Stoke Therapeutics i.e., Stoke Therapeutics and Merus BV go up and down completely randomly.
Pair Corralation between Stoke Therapeutics and Merus BV
Given the investment horizon of 90 days Stoke Therapeutics is expected to generate 1.41 times more return on investment than Merus BV. However, Stoke Therapeutics is 1.41 times more volatile than Merus BV. It trades about -0.03 of its potential returns per unit of risk. Merus BV is currently generating about -0.24 per unit of risk. If you would invest 1,240 in Stoke Therapeutics on August 30, 2024 and sell it today you would lose (49.00) from holding Stoke Therapeutics or give up 3.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stoke Therapeutics vs. Merus BV
Performance |
| Timeline |
| Stoke Therapeutics |
| Merus BV |
Stoke Therapeutics and Merus BV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stoke Therapeutics and Merus BV
The main advantage of trading using opposite Stoke Therapeutics and Merus BV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stoke Therapeutics position performs unexpectedly, Merus BV 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 Merus BV will offset losses from the drop in Merus BV's long position.| Stoke Therapeutics vs. Ikena Oncology | Stoke Therapeutics vs. Eliem Therapeutics | Stoke Therapeutics vs. HCW Biologics | Stoke Therapeutics vs. RenovoRx |
| Merus BV vs. Anebulo Pharmaceuticals | Merus BV vs. Adagene | Merus BV vs. Acrivon Therapeutics, Common | Merus BV vs. AnaptysBio |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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