Correlation Between Sarepta Therapeutics and Mirum Pharmaceuticals

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

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

Diversification Opportunities for Sarepta Therapeutics and Mirum Pharmaceuticals

-0.66

Correlation Coefficient

Sarepta Therapeutics  Mirum Pharmaceuticals

Excellent diversification

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

Pair Corralation between Sarepta Therapeutics and Mirum Pharmaceuticals

Given the investment horizon of 90 days Sarepta Therapeutics is expected to under-perform the Mirum Pharmaceuticals. But the stock apears to be less risky and, when comparing its historical volatility, Sarepta Therapeutics is 1.24 times less risky than Mirum Pharmaceuticals. The stock trades about -0.18 of its potential returns per unit of risk. The Mirum Pharmaceuticals is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  4,547  in Mirum Pharmaceuticals on December 4, 2024 and sell it today you would earn a total of  52.00  from holding Mirum Pharmaceuticals or generate 1.14% return on investment over 90 days.

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

Sarepta Therapeutics  vs.  Mirum Pharmaceuticals

Sarepta Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sarepta Therapeutics 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 comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Mirum Pharmaceuticals

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mirum Pharmaceuticals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Mirum Pharmaceuticals is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Sarepta Therapeutics and Mirum Pharmaceuticals

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

The idea behind Sarepta Therapeutics and Mirum Pharmaceuticals 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.