Correlation Between MEDICAL FACILITIES and Merit Medical
Can any of the company-specific risk be diversified away by investing in both MEDICAL FACILITIES and Merit Medical 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 MEDICAL FACILITIES and Merit Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MEDICAL FACILITIES NEW and Merit Medical Systems, you can compare the effects of market volatilities on MEDICAL FACILITIES and Merit Medical 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 MEDICAL FACILITIES with a short position of Merit Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of MEDICAL FACILITIES and Merit Medical.
Diversification Opportunities for MEDICAL FACILITIES and Merit Medical
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between MEDICAL and Merit is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding MEDICAL FACILITIES NEW and Merit Medical Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merit Medical Systems and MEDICAL FACILITIES 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 MEDICAL FACILITIES NEW are associated (or correlated) with Merit Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merit Medical Systems has no effect on the direction of MEDICAL FACILITIES i.e., MEDICAL FACILITIES and Merit Medical go up and down completely randomly.
Pair Corralation between MEDICAL FACILITIES and Merit Medical
Assuming the 90 days horizon MEDICAL FACILITIES NEW is expected to generate 1.57 times more return on investment than Merit Medical. However, MEDICAL FACILITIES is 1.57 times more volatile than Merit Medical Systems. It trades about 0.11 of its potential returns per unit of risk. Merit Medical Systems is currently generating about 0.14 per unit of risk. If you would invest 798.00 in MEDICAL FACILITIES NEW on September 1, 2024 and sell it today you would earn a total of 292.00 from holding MEDICAL FACILITIES NEW or generate 36.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
MEDICAL FACILITIES NEW vs. Merit Medical Systems
Performance |
| Timeline |
| MEDICAL FACILITIES NEW |
| Merit Medical Systems |
MEDICAL FACILITIES and Merit Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MEDICAL FACILITIES and Merit Medical
The main advantage of trading using opposite MEDICAL FACILITIES and Merit Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MEDICAL FACILITIES position performs unexpectedly, Merit Medical 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 Merit Medical will offset losses from the drop in Merit Medical's long position.| MEDICAL FACILITIES vs. YATRA ONLINE DL 0001 | MEDICAL FACILITIES vs. Carsales | MEDICAL FACILITIES vs. Science Applications International | MEDICAL FACILITIES vs. Data3 Limited |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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