Correlation Between Eastman Chemical and Merit Medical
Can any of the company-specific risk be diversified away by investing in both Eastman Chemical 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 Eastman Chemical and Merit Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastman Chemical and Merit Medical Systems, you can compare the effects of market volatilities on Eastman Chemical 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 Eastman Chemical with a short position of Merit Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastman Chemical and Merit Medical.
Diversification Opportunities for Eastman Chemical and Merit Medical
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Eastman and Merit is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Chemical 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 Eastman Chemical 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 Eastman Chemical 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 Eastman Chemical i.e., Eastman Chemical and Merit Medical go up and down completely randomly.
Pair Corralation between Eastman Chemical and Merit Medical
Considering the 90-day investment horizon Eastman Chemical is expected to generate 9.54 times less return on investment than Merit Medical. In addition to that, Eastman Chemical is 1.21 times more volatile than Merit Medical Systems. It trades about 0.01 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 8,238 in Merit Medical Systems on September 5, 2024 and sell it today you would earn a total of 2,244 from holding Merit Medical Systems or generate 27.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eastman Chemical vs. Merit Medical Systems
Performance |
| Timeline |
| Eastman Chemical |
| Merit Medical Systems |
Eastman Chemical and Merit Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastman Chemical and Merit Medical
The main advantage of trading using opposite Eastman Chemical and Merit Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastman Chemical 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.| Eastman Chemical vs. Air Products and | Eastman Chemical vs. International Flavors Fragrances | Eastman Chemical vs. Sherwin Williams Co | Eastman Chemical vs. PPG Industries |
| 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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