Correlation Between US Lithium and Merck KGaA
Can any of the company-specific risk be diversified away by investing in both US Lithium 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 US Lithium and Merck KGaA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US Lithium Corp and Merck KGaA ADR, you can compare the effects of market volatilities on US Lithium 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 US Lithium with a short position of Merck KGaA. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Lithium and Merck KGaA.
Diversification Opportunities for US Lithium and Merck KGaA
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between LITH and Merck is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding US Lithium Corp 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 US Lithium 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 US Lithium Corp 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 US Lithium i.e., US Lithium and Merck KGaA go up and down completely randomly.
Pair Corralation between US Lithium and Merck KGaA
If you would invest 0.04 in US Lithium Corp on August 29, 2024 and sell it today you would earn a total of 0.00 from holding US Lithium Corp or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 98.44% |
| Values | Daily Returns |
US Lithium Corp vs. Merck KGaA ADR
Performance |
| Timeline |
| US Lithium Corp |
| Merck KGaA ADR |
US Lithium and Merck KGaA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Lithium and Merck KGaA
The main advantage of trading using opposite US Lithium and Merck KGaA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Lithium 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.| US Lithium vs. Mc Endvrs | US Lithium vs. Kali Inc | US Lithium vs. One World Pharma | US Lithium vs. HempAmericana |
| Merck KGaA vs. Recruit Holdings Co | Merck KGaA vs. Fresenius SE Co | Merck KGaA vs. Straumann Holding AG | Merck KGaA vs. MERCK Kommanditgesellschaft auf |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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