Correlation Between Goodbody Health and Merck KGaA
Can any of the company-specific risk be diversified away by investing in both Goodbody Health and Merck KGaA 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 Goodbody Health and Merck KGaA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goodbody Health and Merck KGaA ADR, you can compare the effects of market volatilities on Goodbody Health and Merck KGaA 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 Goodbody Health with a short position of Merck KGaA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goodbody Health and Merck KGaA.
Diversification Opportunities for Goodbody Health and Merck KGaA
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Goodbody and Merck is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Goodbody Health and Merck KGaA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merck KGaA ADR and Goodbody Health 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 Goodbody Health are associated (or correlated) with Merck KGaA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merck KGaA ADR has no effect on the direction of Goodbody Health i.e., Goodbody Health and Merck KGaA go up and down completely randomly.
Pair Corralation between Goodbody Health and Merck KGaA
Assuming the 90 days horizon Goodbody Health is expected to generate 34.76 times more return on investment than Merck KGaA. However, Goodbody Health is 34.76 times more volatile than Merck KGaA ADR. It trades about 0.06 of its potential returns per unit of risk. Merck KGaA ADR is currently generating about -0.02 per unit of risk. If you would invest 0.00 in Goodbody Health on August 29, 2024 and sell it today you would earn a total of 0.00 from holding Goodbody Health or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Goodbody Health vs. Merck KGaA ADR
Performance |
| Timeline |
| Goodbody Health |
| Merck KGaA ADR |
Goodbody Health and Merck KGaA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goodbody Health and Merck KGaA
The main advantage of trading using opposite Goodbody Health and Merck KGaA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goodbody Health position performs unexpectedly, Merck KGaA 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 KGaA will offset losses from the drop in Merck KGaA's long position.| Goodbody Health vs. Anything Tech Media | Goodbody Health vs. Nutralife Biosciences | Goodbody Health vs. Merck KGaA ADR | Goodbody Health vs. Mc Endvrs |
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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