Correlation Between AmeraMex International and Merck
Can any of the company-specific risk be diversified away by investing in both AmeraMex International 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 AmeraMex International and Merck into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AmeraMex International and Merck Company, you can compare the effects of market volatilities on AmeraMex International 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 AmeraMex International with a short position of Merck. Check out your portfolio center. Please also check ongoing floating volatility patterns of AmeraMex International and Merck.
Diversification Opportunities for AmeraMex International and Merck
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between AmeraMex and Merck is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding AmeraMex International and Merck Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merck Company and AmeraMex International 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 AmeraMex International 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 AmeraMex International i.e., AmeraMex International and Merck go up and down completely randomly.
Pair Corralation between AmeraMex International and Merck
Given the investment horizon of 90 days AmeraMex International is expected to under-perform the Merck. In addition to that, AmeraMex International is 10.31 times more volatile than Merck Company. It trades about -0.1 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 10,232 in Merck Company on September 1, 2024 and sell it today you would lose (68.00) from holding Merck Company or give up 0.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AmeraMex International vs. Merck Company
Performance |
| Timeline |
| AmeraMex International |
| Merck Company |
AmeraMex International and Merck Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AmeraMex International and Merck
The main advantage of trading using opposite AmeraMex International and Merck positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AmeraMex International 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.| AmeraMex International vs. American Premium Water | AmeraMex International vs. Arts Way Manufacturing Co | AmeraMex International vs. Astec Industries | AmeraMex International vs. Alamo Group |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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