Correlation Between Merrimack Pharmaceuticals and Terns Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Merrimack Pharmaceuticals and Terns Pharmaceuticals 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 Merrimack Pharmaceuticals and Terns Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merrimack Pharmaceuticals and Terns Pharmaceuticals, you can compare the effects of market volatilities on Merrimack Pharmaceuticals and Terns Pharmaceuticals 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 Merrimack Pharmaceuticals with a short position of Terns Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merrimack Pharmaceuticals and Terns Pharmaceuticals.
Diversification Opportunities for Merrimack Pharmaceuticals and Terns Pharmaceuticals
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Merrimack and Terns is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Merrimack Pharmaceuticals and Terns Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Terns Pharmaceuticals and Merrimack Pharmaceuticals 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 Merrimack Pharmaceuticals are associated (or correlated) with Terns Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Terns Pharmaceuticals has no effect on the direction of Merrimack Pharmaceuticals i.e., Merrimack Pharmaceuticals and Terns Pharmaceuticals go up and down completely randomly.
Pair Corralation between Merrimack Pharmaceuticals and Terns Pharmaceuticals
Given the investment horizon of 90 days Merrimack Pharmaceuticals is expected to generate 0.07 times more return on investment than Terns Pharmaceuticals. However, Merrimack Pharmaceuticals is 15.07 times less risky than Terns Pharmaceuticals. It trades about 0.14 of its potential returns per unit of risk. Terns Pharmaceuticals is currently generating about -0.16 per unit of risk. If you would invest 1,471 in Merrimack Pharmaceuticals on February 5, 2024 and sell it today you would earn a total of 29.00 from holding Merrimack Pharmaceuticals or generate 1.97% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Merrimack Pharmaceuticals vs. Terns Pharmaceuticals
Performance |
Timeline |
Merrimack Pharmaceuticals |
Terns Pharmaceuticals |
Merrimack Pharmaceuticals and Terns Pharmaceuticals Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Merrimack Pharmaceuticals and Terns Pharmaceuticals
The main advantage of trading using opposite Merrimack Pharmaceuticals and Terns Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merrimack Pharmaceuticals position performs unexpectedly, Terns Pharmaceuticals 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 Terns Pharmaceuticals will offset losses from the drop in Terns Pharmaceuticals' long position.Merrimack Pharmaceuticals vs. Quoin Pharmaceuticals Ltd | Merrimack Pharmaceuticals vs. Morningstar Unconstrained Allocation |
Terns Pharmaceuticals vs. Quoin Pharmaceuticals Ltd | Terns Pharmaceuticals vs. Morningstar Unconstrained Allocation |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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