Correlation Between DAX Index and Merck
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By analyzing existing cross correlation between DAX Index and Merck Company, you can compare the effects of market volatilities on DAX Index 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 DAX Index with a short position of Merck. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAX Index and Merck.
Diversification Opportunities for DAX Index and Merck
Excellent diversification
The 3 months correlation between DAX and Merck is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding DAX Index and Merck Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merck Company and DAX Index 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 DAX Index 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 DAX Index i.e., DAX Index and Merck go up and down completely randomly.
Pair Corralation between DAX Index and Merck
Assuming the 90 days trading horizon DAX Index is expected to generate 0.72 times more return on investment than Merck. However, DAX Index is 1.39 times less risky than Merck. It trades about 0.05 of its potential returns per unit of risk. Merck Company is currently generating about -0.25 per unit of risk. If you would invest 1,925,734 in DAX Index on August 31, 2024 and sell it today you would earn a total of 16,839 from holding DAX Index or generate 0.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
DAX Index vs. Merck Company
Performance |
| Timeline |
DAX Index and Merck Volatility Contrast
Predicted Return Density |
| Returns |
DAX Index
Pair trading matchups for DAX Index
Merck Company
Pair trading matchups for Merck
Pair Trading with DAX Index and Merck
The main advantage of trading using opposite DAX Index and Merck positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAX Index 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.| DAX Index vs. Magnachip Semiconductor | DAX Index vs. Taiwan Semiconductor Manufacturing | DAX Index vs. Broadcom | DAX Index vs. MagnaChip Semiconductor Corp |
| Merck vs. SIVERS SEMICONDUCTORS AB | Merck vs. Darden Restaurants | Merck vs. Reliance Steel Aluminum | Merck vs. Q2M Managementberatung AG |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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