Correlation Between Shattuck Labs and Merus BV

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

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

Diversification Opportunities for Shattuck Labs and Merus BV

0.27

Correlation Coefficient

Shattuck Labs  Merus BV

Modest diversification

The 3 months correlation between Shattuck and Merus is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Shattuck Labs and Merus BV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merus BV and Shattuck Labs 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 Shattuck Labs 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 Shattuck Labs i.e., Shattuck Labs and Merus BV go up and down completely randomly.

Pair Corralation between Shattuck Labs and Merus BV

Given the investment horizon of 90 days Shattuck Labs is expected to generate 1.51 times less return on investment than Merus BV. In addition to that, Shattuck Labs is 2.71 times more volatile than Merus BV. It trades about 0.01 of its total potential returns per unit of risk. Merus BV is currently generating about 0.05 per unit of volatility. If you would invest  4,189  in Merus BV on December 29, 2024 and sell it today you would earn a total of  294.00  from holding Merus BV or generate 7.02% return on investment over 90 days.

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

Shattuck Labs  vs.  Merus BV

Shattuck Labs

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Shattuck Labs are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Shattuck Labs is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

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.

Pair Trading with Shattuck Labs and Merus BV

The main advantage of trading using opposite Shattuck Labs and Merus BV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shattuck Labs 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 Shattuck Labs 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.