Correlation Between Vaxcyte and Merus BV

Can any of the company-specific risk be diversified away by investing in both Vaxcyte 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 Vaxcyte and Merus BV into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Vaxcyte and Merus BV, you can compare the effects of market volatilities on Vaxcyte 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 Vaxcyte with a short position of Merus BV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vaxcyte and Merus BV.

Diversification Opportunities for Vaxcyte and Merus BV

0.41

Correlation Coefficient

Vaxcyte  Merus BV

Very weak diversification

The 3 months correlation between Vaxcyte and Merus is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Vaxcyte and Merus BV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merus BV and Vaxcyte 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 Vaxcyte 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 Vaxcyte i.e., Vaxcyte and Merus BV go up and down completely randomly.

Pair Corralation between Vaxcyte and Merus BV

Given the investment horizon of 90 days Vaxcyte is expected to under-perform the Merus BV. In addition to that, Vaxcyte is 1.05 times more volatile than Merus BV. It trades about -0.1 of its total potential returns per unit of risk. Merus BV is currently generating about -0.08 per unit of volatility. If you would invest  5,047  in Merus BV on August 31, 2024 and sell it today you would lose (550.00) from holding Merus BV or give up 10.9% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Vaxcyte  vs.  Merus BV

Vaxcyte

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Vaxcyte has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Merus BV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Merus BV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Vaxcyte and Merus BV

The main advantage of trading using opposite Vaxcyte and Merus BV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vaxcyte 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.

The idea behind Vaxcyte and Merus BV 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.