Correlation Between HEIA and Merit Medical
Can any of the company-specific risk be diversified away by investing in both HEIA 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 HEIA and Merit Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HEIA and Merit Medical Systems, you can compare the effects of market volatilities on HEIA 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 HEIA with a short position of Merit Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of HEIA and Merit Medical.
Diversification Opportunities for HEIA and Merit Medical
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between HEIA and Merit is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding HEIA 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 HEIA 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 HEIA 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 HEIA i.e., HEIA and Merit Medical go up and down completely randomly.
Pair Corralation between HEIA and Merit Medical
Given the investment horizon of 90 days HEIA is expected to generate 1.24 times less return on investment than Merit Medical. But when comparing it to its historical volatility, HEIA is 1.21 times less risky than Merit Medical. It trades about 0.14 of its potential returns per unit of risk. Merit Medical Systems is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 7,400 in Merit Medical Systems on September 1, 2024 and sell it today you would earn a total of 2,350 from holding Merit Medical Systems or generate 31.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 58.46% |
| Values | Daily Returns |
HEIA vs. Merit Medical Systems
Performance |
| Timeline |
| HEIA |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
| Merit Medical Systems |
HEIA and Merit Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HEIA and Merit Medical
The main advantage of trading using opposite HEIA and Merit Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HEIA 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.| HEIA vs. SALESFORCE INC CDR | HEIA vs. Tower Semiconductor | HEIA vs. SIDETRADE EO 1 | HEIA vs. ETFS Coffee ETC |
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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