Correlation Between SHIP HEALTHCARE and Merit Medical
Can any of the company-specific risk be diversified away by investing in both SHIP HEALTHCARE 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 SHIP HEALTHCARE and Merit Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SHIP HEALTHCARE HLDGINC and Merit Medical Systems, you can compare the effects of market volatilities on SHIP HEALTHCARE 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 SHIP HEALTHCARE with a short position of Merit Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of SHIP HEALTHCARE and Merit Medical.
Diversification Opportunities for SHIP HEALTHCARE and Merit Medical
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SHIP and Merit is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding SHIP HEALTHCARE HLDGINC 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 SHIP HEALTHCARE 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 SHIP HEALTHCARE HLDGINC 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 SHIP HEALTHCARE i.e., SHIP HEALTHCARE and Merit Medical go up and down completely randomly.
Pair Corralation between SHIP HEALTHCARE and Merit Medical
Assuming the 90 days horizon SHIP HEALTHCARE is expected to generate 1.24 times less return on investment than Merit Medical. In addition to that, SHIP HEALTHCARE is 1.67 times more volatile than Merit Medical Systems. It trades about 0.02 of its total potential returns per unit of risk. Merit Medical Systems is currently generating about 0.05 per unit of volatility. If you would invest 6,850 in Merit Medical Systems on September 3, 2024 and sell it today you would earn a total of 3,050 from holding Merit Medical Systems or generate 44.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SHIP HEALTHCARE HLDGINC vs. Merit Medical Systems
Performance |
| Timeline |
| SHIP HEALTHCARE HLDGINC |
| Merit Medical Systems |
SHIP HEALTHCARE and Merit Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SHIP HEALTHCARE and Merit Medical
The main advantage of trading using opposite SHIP HEALTHCARE and Merit Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SHIP HEALTHCARE 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.| SHIP HEALTHCARE vs. DEVRY EDUCATION GRP | SHIP HEALTHCARE vs. Titan Machinery | SHIP HEALTHCARE vs. CHINA EDUCATION GROUP | SHIP HEALTHCARE vs. United Utilities Group |
| Merit Medical vs. Apple Inc | Merit Medical vs. Apple Inc | Merit Medical vs. Apple Inc | Merit Medical vs. Apple Inc |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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