Correlation Between Boston Beer and Merit Medical
Can any of the company-specific risk be diversified away by investing in both Boston Beer 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 Boston Beer and Merit Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Boston Beer and Merit Medical Systems, you can compare the effects of market volatilities on Boston Beer 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 Boston Beer with a short position of Merit Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Beer and Merit Medical.
Diversification Opportunities for Boston Beer and Merit Medical
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Boston and Merit is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding The Boston Beer 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 Boston Beer 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 The Boston Beer 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 Boston Beer i.e., Boston Beer and Merit Medical go up and down completely randomly.
Pair Corralation between Boston Beer and Merit Medical
Assuming the 90 days trading horizon Boston Beer is expected to generate 1.16 times less return on investment than Merit Medical. In addition to that, Boston Beer is 1.48 times more volatile than Merit Medical Systems. It trades about 0.09 of its total potential returns per unit of risk. Merit Medical Systems is currently generating about 0.16 per unit of volatility. If you would invest 7,400 in Merit Medical Systems on August 28, 2024 and sell it today you would earn a total of 2,550 from holding Merit Medical Systems or generate 34.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Boston Beer vs. Merit Medical Systems
Performance |
| Timeline |
| Boston Beer |
| Merit Medical Systems |
Boston Beer and Merit Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Beer and Merit Medical
The main advantage of trading using opposite Boston Beer and Merit Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Beer 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.| Boston Beer vs. Merit Medical Systems | Boston Beer vs. CVR Medical Corp | Boston Beer vs. Apyx Medical Corp | Boston Beer vs. Compugroup Medical SE |
| Merit Medical vs. Ming Le Sports | Merit Medical vs. Ribbon Communications | Merit Medical vs. Chunghwa Telecom Co | Merit Medical vs. Entravision Communications |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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