Correlation Between Merus BV and Shattuck Labs

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

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

Diversification Opportunities for Merus BV and Shattuck Labs

0.27

Correlation Coefficient

Merus BV  Shattuck Labs

Modest diversification

The 3 months correlation between Merus and Shattuck is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Merus BV and Shattuck Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shattuck Labs and Merus BV 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 Merus BV are associated (or correlated) with Shattuck Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shattuck Labs has no effect on the direction of Merus BV i.e., Merus BV and Shattuck Labs go up and down completely randomly.

Pair Corralation between Merus BV and Shattuck Labs

Given the investment horizon of 90 days Merus BV is expected to generate 1.45 times less return on investment than Shattuck Labs. But when comparing it to its historical volatility, Merus BV is 2.69 times less risky than Shattuck Labs. It trades about 0.05 of its potential returns per unit of risk. Shattuck Labs is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  117.00  in Shattuck Labs on December 29, 2024 and sell it today you would lose (3.00) from holding Shattuck Labs or give up 2.56% of portfolio value over 90 days.

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

Merus BV  vs.  Shattuck Labs

Merus BV

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Merus BV are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Merus BV may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Shattuck Labs

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Shattuck Labs are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, Shattuck Labs disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Merus BV and Shattuck Labs

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

The idea behind Merus BV and Shattuck Labs 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.