Correlation Between Ipsen SA and Merit Medical
Can any of the company-specific risk be diversified away by investing in both Ipsen SA 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 Ipsen SA and Merit Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ipsen SA and Merit Medical Systems, you can compare the effects of market volatilities on Ipsen SA 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 Ipsen SA with a short position of Merit Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ipsen SA and Merit Medical.
Diversification Opportunities for Ipsen SA and Merit Medical
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ipsen and Merit is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Ipsen SA 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 Ipsen SA 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 Ipsen SA 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 Ipsen SA i.e., Ipsen SA and Merit Medical go up and down completely randomly.
Pair Corralation between Ipsen SA and Merit Medical
Assuming the 90 days horizon Ipsen SA is expected to under-perform the Merit Medical. But the stock apears to be less risky and, when comparing its historical volatility, Ipsen SA is 1.13 times less risky than Merit Medical. The stock trades about -0.02 of its potential returns per unit of risk. The Merit Medical Systems is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 9,750 in Merit Medical Systems on September 13, 2024 and sell it today you would earn a total of 150.00 from holding Merit Medical Systems or generate 1.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ipsen SA vs. Merit Medical Systems
Performance |
| Timeline |
| Ipsen SA |
| Merit Medical Systems |
Ipsen SA and Merit Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ipsen SA and Merit Medical
The main advantage of trading using opposite Ipsen SA and Merit Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ipsen SA 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.| Ipsen SA vs. Renesas Electronics | Ipsen SA vs. METHODE ELECTRONICS | Ipsen SA vs. Methode Electronics | Ipsen SA vs. KIMBALL ELECTRONICS |
| Merit Medical vs. Apple Inc | Merit Medical vs. Apple Inc | Merit Medical vs. Apple Inc | Merit Medical vs. Apple Inc |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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