Correlation Between Acco Brands and Merit Medical
Can any of the company-specific risk be diversified away by investing in both Acco Brands 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 Acco Brands and Merit Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Acco Brands and Merit Medical Systems, you can compare the effects of market volatilities on Acco Brands 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 Acco Brands with a short position of Merit Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acco Brands and Merit Medical.
Diversification Opportunities for Acco Brands and Merit Medical
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Acco and Merit is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Acco Brands 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 Acco Brands 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 Acco Brands 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 Acco Brands i.e., Acco Brands and Merit Medical go up and down completely randomly.
Pair Corralation between Acco Brands and Merit Medical
Given the investment horizon of 90 days Acco Brands is expected to generate 68.96 times less return on investment than Merit Medical. But when comparing it to its historical volatility, Acco Brands is 1.08 times less risky than Merit Medical. It trades about 0.01 of its potential returns per unit of risk. Merit Medical Systems is currently generating about 0.42 of returns per unit of risk over similar time horizon. If you would invest 9,589 in Merit Medical Systems on November 4, 2024 and sell it today you would earn a total of 1,299 from holding Merit Medical Systems or generate 13.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Acco Brands vs. Merit Medical Systems
Performance |
| Timeline |
| Acco Brands |
| Merit Medical Systems |
Acco Brands and Merit Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Acco Brands and Merit Medical
The main advantage of trading using opposite Acco Brands and Merit Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acco Brands 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.| Acco Brands vs. HNI Corp | Acco Brands vs. Steelcase | Acco Brands vs. Ennis Inc | Acco Brands vs. Acacia Research |
| Merit Medical vs. Teleflex Incorporated | Merit Medical vs. The Cooper Companies, | Merit Medical vs. West Pharmaceutical Services | Merit Medical vs. ICU Medical |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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