Correlation Between Melrose Industries and Spyre Therapeutics

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

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

Diversification Opportunities for Melrose Industries and Spyre Therapeutics

-0.03

Correlation Coefficient

Melrose Industries  Spyre Therapeutics

Good diversification

The 3 months correlation between Melrose and Spyre is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Melrose Industries PLC and Spyre Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spyre Therapeutics and Melrose Industries 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 Melrose Industries PLC are associated (or correlated) with Spyre Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spyre Therapeutics has no effect on the direction of Melrose Industries i.e., Melrose Industries and Spyre Therapeutics go up and down completely randomly.

Pair Corralation between Melrose Industries and Spyre Therapeutics

Assuming the 90 days horizon Melrose Industries PLC is expected to generate 1.58 times more return on investment than Spyre Therapeutics. However, Melrose Industries is 1.58 times more volatile than Spyre Therapeutics. It trades about 0.03 of its potential returns per unit of risk. Spyre Therapeutics is currently generating about -0.1 per unit of risk. If you would invest  711.00  in Melrose Industries PLC on December 20, 2024 and sell it today you would earn a total of  11.00  from holding Melrose Industries PLC or generate 1.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.67%
Values	Daily Returns

Melrose Industries PLC  vs.  Spyre Therapeutics

Melrose Industries PLC

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Melrose Industries PLC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Melrose Industries may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Spyre Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Spyre Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Melrose Industries and Spyre Therapeutics

The main advantage of trading using opposite Melrose Industries and Spyre Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Melrose Industries position performs unexpectedly, Spyre 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 Spyre Therapeutics will offset losses from the drop in Spyre Therapeutics' long position.

The idea behind Melrose Industries PLC and Spyre 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.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.