Correlation Between BAWAG Group and Merck
Can any of the company-specific risk be diversified away by investing in both BAWAG Group 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 BAWAG Group and Merck into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BAWAG Group AG and Merck Company, you can compare the effects of market volatilities on BAWAG Group 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 BAWAG Group with a short position of Merck. Check out your portfolio center. Please also check ongoing floating volatility patterns of BAWAG Group and Merck.
Diversification Opportunities for BAWAG Group and Merck
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BAWAG and Merck is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding BAWAG Group AG and Merck Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merck Company and BAWAG Group 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 BAWAG Group AG 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 BAWAG Group i.e., BAWAG Group and Merck go up and down completely randomly.
Pair Corralation between BAWAG Group and Merck
Assuming the 90 days horizon BAWAG Group AG is expected to generate 1.15 times more return on investment than Merck. However, BAWAG Group is 1.15 times more volatile than Merck Company. It trades about 0.11 of its potential returns per unit of risk. Merck Company is currently generating about -0.06 per unit of risk. If you would invest 6,955 in BAWAG Group AG on August 31, 2024 and sell it today you would earn a total of 480.00 from holding BAWAG Group AG or generate 6.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 97.78% |
| Values | Daily Returns |
BAWAG Group AG vs. Merck Company
Performance |
| Timeline |
| BAWAG Group AG |
| Merck Company |
BAWAG Group and Merck Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BAWAG Group and Merck
The main advantage of trading using opposite BAWAG Group and Merck positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BAWAG Group 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.| BAWAG Group vs. Erste Group Bank | BAWAG Group vs. Raiffeisen Bank International | BAWAG Group vs. UNIQA Insurance Group | BAWAG Group vs. OMV Aktiengesellschaft |
| Merck vs. RATH Aktiengesellschaft | Merck vs. AT S Austria | Merck vs. BAWAG Group AG | Merck vs. Semperit Aktiengesellschaft Holding |
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 CEOs Directory module to screen CEOs from public companies around the world.
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