Correlation Between Viridian Therapeutics and Mersana Therapeutics

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Can any of the company-specific risk be diversified away by investing in both Viridian Therapeutics and Mersana Therapeutics 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 Viridian Therapeutics and Mersana Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Viridian Therapeutics and Mersana Therapeutics, you can compare the effects of market volatilities on Viridian Therapeutics and Mersana Therapeutics 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 Viridian Therapeutics with a short position of Mersana Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Viridian Therapeutics and Mersana Therapeutics.

Diversification Opportunities for Viridian Therapeutics and Mersana Therapeutics

ViridianMersanaDiversified AwayViridianMersanaDiversified Away100%
0.66
  Correlation Coefficient

Poor diversification

The 3 months correlation between Viridian and Mersana is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Viridian Therapeutics and Mersana Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mersana Therapeutics and Viridian 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 Viridian Therapeutics are associated (or correlated) with Mersana Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mersana Therapeutics has no effect on the direction of Viridian Therapeutics i.e., Viridian Therapeutics and Mersana Therapeutics go up and down completely randomly.

Pair Corralation between Viridian Therapeutics and Mersana Therapeutics

Given the investment horizon of 90 days Viridian Therapeutics is expected to under-perform the Mersana Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Viridian Therapeutics is 2.81 times less risky than Mersana Therapeutics. The stock trades about -0.42 of its potential returns per unit of risk. The Mersana Therapeutics is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  59.00  in Mersana Therapeutics on November 30, 2024 and sell it today you would lose (9.00) from holding Mersana Therapeutics or give up 15.25% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Viridian Therapeutics  vs.  Mersana Therapeutics

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -60-40-20020
JavaScript chart by amCharts 3.21.15VRDN MRSN
       Timeline  
Viridian Therapeutics 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Viridian Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in March 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb1617181920212223
Mersana Therapeutics 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Mersana Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in March 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb0.511.522.53

Viridian Therapeutics and Mersana Therapeutics Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-6.66-5.02-3.38-1.75-0.111.42.914.425.937.43 0.0050.0100.0150.0200.025
JavaScript chart by amCharts 3.21.15VRDN MRSN
       Returns  

Pair Trading with Viridian Therapeutics and Mersana Therapeutics

The main advantage of trading using opposite Viridian Therapeutics and Mersana Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Viridian Therapeutics position performs unexpectedly, Mersana Therapeutics 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 Mersana Therapeutics will offset losses from the drop in Mersana Therapeutics' long position.
The idea behind Viridian Therapeutics and Mersana Therapeutics pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.

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