Correlation Between Hospital Mater and Merck
Can any of the company-specific risk be diversified away by investing in both Hospital Mater and Merck 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 Hospital Mater and Merck into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hospital Mater Dei and Merck Co, you can compare the effects of market volatilities on Hospital Mater and Merck 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 Hospital Mater with a short position of Merck. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hospital Mater and Merck.
Diversification Opportunities for Hospital Mater and Merck
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hospital and Merck is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Hospital Mater Dei and Merck Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merck and Hospital Mater 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 Hospital Mater Dei are associated (or correlated) with Merck. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merck has no effect on the direction of Hospital Mater i.e., Hospital Mater and Merck go up and down completely randomly.
Pair Corralation between Hospital Mater and Merck
Assuming the 90 days trading horizon Hospital Mater Dei is expected to under-perform the Merck. In addition to that, Hospital Mater is 1.72 times more volatile than Merck Co. It trades about -0.02 of its total potential returns per unit of risk. Merck Co is currently generating about 0.02 per unit of volatility. If you would invest 7,079 in Merck Co on September 3, 2024 and sell it today you would earn a total of 567.00 from holding Merck Co or generate 8.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hospital Mater Dei vs. Merck Co
Performance |
| Timeline |
| Hospital Mater Dei |
| Merck |
Hospital Mater and Merck Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hospital Mater and Merck
The main advantage of trading using opposite Hospital Mater and Merck positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hospital Mater position performs unexpectedly, Merck 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 will offset losses from the drop in Merck's long position.| Hospital Mater vs. Fundo Investimento Imobiliario | Hospital Mater vs. Fras le SA | Hospital Mater vs. Western Digital | Hospital Mater vs. Clave Indices De |
| Merck vs. Ross Stores | Merck vs. Hospital Mater Dei | Merck vs. UnitedHealth Group Incorporated | Merck vs. Delta Air Lines |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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