Correlation Between First Merchants and MYMD Old
Can any of the company-specific risk be diversified away by investing in both First Merchants and MYMD Old 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 First Merchants and MYMD Old into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Merchants and MYMD Old, you can compare the effects of market volatilities on First Merchants and MYMD Old 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 First Merchants with a short position of MYMD Old. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Merchants and MYMD Old.
Diversification Opportunities for First Merchants and MYMD Old
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and MYMD is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding First Merchants and MYMD Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MYMD Old and First Merchants 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 First Merchants are associated (or correlated) with MYMD Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MYMD Old has no effect on the direction of First Merchants i.e., First Merchants and MYMD Old go up and down completely randomly.
Pair Corralation between First Merchants and MYMD Old
Given the investment horizon of 90 days First Merchants is expected to generate 0.34 times more return on investment than MYMD Old. However, First Merchants is 2.91 times less risky than MYMD Old. It trades about 0.06 of its potential returns per unit of risk. MYMD Old is currently generating about -0.08 per unit of risk. If you would invest 3,246 in First Merchants on October 29, 2024 and sell it today you would earn a total of 873.00 from holding First Merchants or generate 26.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 51.82% |
| Values | Daily Returns |
First Merchants vs. MYMD Old
Performance |
| Timeline |
| First Merchants |
| MYMD Old |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
First Merchants and MYMD Old Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Merchants and MYMD Old
The main advantage of trading using opposite First Merchants and MYMD Old positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Merchants position performs unexpectedly, MYMD Old 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 MYMD Old will offset losses from the drop in MYMD Old's long position.| First Merchants vs. Home Bancorp | First Merchants vs. HomeTrust Bancshares | First Merchants vs. Great Southern Bancorp | First Merchants vs. Finward Bancorp |
| MYMD Old vs. Recursion Pharmaceuticals | MYMD Old vs. Atea Pharmaceuticals | MYMD Old vs. Unity Biotechnology | MYMD Old vs. Replimune 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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