Correlation Between Flexible Solutions and Merit Medical
Can any of the company-specific risk be diversified away by investing in both Flexible Solutions 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 Flexible Solutions and Merit Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flexible Solutions International and Merit Medical Systems, you can compare the effects of market volatilities on Flexible Solutions 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 Flexible Solutions with a short position of Merit Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flexible Solutions and Merit Medical.
Diversification Opportunities for Flexible Solutions and Merit Medical
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Flexible and Merit is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Flexible Solutions Internation 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 Flexible Solutions 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 Flexible Solutions International 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 Flexible Solutions i.e., Flexible Solutions and Merit Medical go up and down completely randomly.
Pair Corralation between Flexible Solutions and Merit Medical
Considering the 90-day investment horizon Flexible Solutions International is expected to under-perform the Merit Medical. In addition to that, Flexible Solutions is 3.27 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 0.34 per unit of volatility. If you would invest 9,531 in Merit Medical Systems on August 27, 2024 and sell it today you would earn a total of 1,002 from holding Merit Medical Systems or generate 10.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flexible Solutions Internation vs. Merit Medical Systems
Performance |
| Timeline |
| Flexible Solutions |
| Merit Medical Systems |
Flexible Solutions and Merit Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flexible Solutions and Merit Medical
The main advantage of trading using opposite Flexible Solutions and Merit Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flexible Solutions 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.| Flexible Solutions vs. Minerals Technologies | Flexible Solutions vs. Oil Dri | Flexible Solutions vs. H B Fuller | Flexible Solutions vs. Northern Technologies |
| Merit Medical vs. Heartbeam | Merit Medical vs. EUDA Health Holdings | Merit Medical vs. Nutex Health | Merit Medical vs. Healthcare Triangle |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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