Correlation Between Elanco Animal and Merck
Can any of the company-specific risk be diversified away by investing in both Elanco Animal and Merck 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 Elanco Animal and Merck into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elanco Animal Health and Merck Company, you can compare the effects of market volatilities on Elanco Animal and Merck 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 Elanco Animal with a short position of Merck. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elanco Animal and Merck.
Diversification Opportunities for Elanco Animal and Merck
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Elanco and Merck is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Elanco Animal Health and Merck Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merck Company and Elanco Animal 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 Elanco Animal Health are associated (or correlated) with Merck. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merck Company has no effect on the direction of Elanco Animal i.e., Elanco Animal and Merck go up and down completely randomly.
Pair Corralation between Elanco Animal and Merck
Assuming the 90 days horizon Elanco Animal Health is expected to under-perform the Merck. In addition to that, Elanco Animal is 1.08 times more volatile than Merck Company. It trades about -0.18 of its total potential returns per unit of risk. Merck Company is currently generating about -0.02 per unit of volatility. If you would invest 14,220 in Merck Company on November 7, 2024 and sell it today you would lose (165.00) from holding Merck Company or give up 1.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elanco Animal Health vs. Merck Company
Performance |
| Timeline |
| Elanco Animal Health |
| Merck Company |
Elanco Animal and Merck Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elanco Animal and Merck
The main advantage of trading using opposite Elanco Animal and Merck positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elanco Animal position performs unexpectedly, Merck 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 Merck will offset losses from the drop in Merck's long position.| Elanco Animal vs. Erste Group Bank | Elanco Animal vs. SUN LIFE FINANCIAL | Elanco Animal vs. CHIBA BANK | Elanco Animal vs. Discover Financial Services |
| Merck vs. SENECA FOODS A | Merck vs. THAI BEVERAGE | Merck vs. Fukuyama Transporting Co | Merck vs. MONEYSUPERMARKET |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |