Correlation Between ICU Medical and Merit Medical
Can any of the company-specific risk be diversified away by investing in both ICU Medical 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 ICU Medical and Merit Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ICU Medical and Merit Medical Systems, you can compare the effects of market volatilities on ICU Medical 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 ICU Medical with a short position of Merit Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of ICU Medical and Merit Medical.
Diversification Opportunities for ICU Medical and Merit Medical
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between ICU and Merit is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding ICU Medical 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 ICU Medical 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 ICU Medical 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 ICU Medical i.e., ICU Medical and Merit Medical go up and down completely randomly.
Pair Corralation between ICU Medical and Merit Medical
Given the investment horizon of 90 days ICU Medical is expected to generate 1.79 times more return on investment than Merit Medical. However, ICU Medical is 1.79 times more volatile than Merit Medical Systems. It trades about 0.11 of its potential returns per unit of risk. Merit Medical Systems is currently generating about 0.11 per unit of risk. If you would invest 8,776 in ICU Medical on August 26, 2024 and sell it today you would earn a total of 8,070 from holding ICU Medical or generate 91.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ICU Medical vs. Merit Medical Systems
Performance |
| Timeline |
| ICU Medical |
| Merit Medical Systems |
ICU Medical and Merit Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ICU Medical and Merit Medical
The main advantage of trading using opposite ICU Medical and Merit Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ICU Medical 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.| ICU Medical vs. Merit Medical Systems | ICU Medical vs. The Cooper Companies, | ICU Medical vs. AngioDynamics | ICU Medical vs. AptarGroup |
| 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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