Correlation Between Altice USA and Merck
Can any of the company-specific risk be diversified away by investing in both Altice USA 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 Altice USA and Merck into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Altice USA and Merck Company, you can compare the effects of market volatilities on Altice USA 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 Altice USA with a short position of Merck. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altice USA and Merck.
Diversification Opportunities for Altice USA and Merck
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Altice and Merck is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Altice USA and Merck Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merck Company and Altice USA 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 Altice USA 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 Altice USA i.e., Altice USA and Merck go up and down completely randomly.
Pair Corralation between Altice USA and Merck
Given the investment horizon of 90 days Altice USA is expected to under-perform the Merck. In addition to that, Altice USA is 2.66 times more volatile than Merck Company. It trades about -0.01 of its total potential returns per unit of risk. Merck Company is currently generating about -0.03 per unit of volatility. If you would invest 10,423 in Merck Company on August 29, 2024 and sell it today you would lose (112.50) from holding Merck Company or give up 1.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Altice USA vs. Merck Company
Performance |
| Timeline |
| Altice USA |
| Merck Company |
Altice USA and Merck Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Altice USA and Merck
The main advantage of trading using opposite Altice USA and Merck positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Altice USA 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.| Altice USA vs. Merck Company | Altice USA vs. Pharvaris BV | Altice USA vs. Brinker International | Altice USA vs. Alcoa Corp |
| Merck vs. Pharvaris BV | Merck vs. Brinker International | Merck vs. Alcoa Corp | Merck vs. Direxion Daily FTSE |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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