Correlation Between MERCK Kommanditgesells and Cresco Labs
Can any of the company-specific risk be diversified away by investing in both MERCK Kommanditgesells and Cresco Labs 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 MERCK Kommanditgesells and Cresco Labs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MERCK Kommanditgesellschaft auf and Cresco Labs, you can compare the effects of market volatilities on MERCK Kommanditgesells and Cresco Labs 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 MERCK Kommanditgesells with a short position of Cresco Labs. Check out your portfolio center. Please also check ongoing floating volatility patterns of MERCK Kommanditgesells and Cresco Labs.
Diversification Opportunities for MERCK Kommanditgesells and Cresco Labs
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MERCK and Cresco is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding MERCK Kommanditgesellschaft au and Cresco Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cresco Labs and MERCK Kommanditgesells 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 MERCK Kommanditgesellschaft auf are associated (or correlated) with Cresco Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cresco Labs has no effect on the direction of MERCK Kommanditgesells i.e., MERCK Kommanditgesells and Cresco Labs go up and down completely randomly.
Pair Corralation between MERCK Kommanditgesells and Cresco Labs
Assuming the 90 days horizon MERCK Kommanditgesellschaft auf is expected to generate 0.18 times more return on investment than Cresco Labs. However, MERCK Kommanditgesellschaft auf is 5.62 times less risky than Cresco Labs. It trades about -0.29 of its potential returns per unit of risk. Cresco Labs is currently generating about -0.13 per unit of risk. If you would invest 16,925 in MERCK Kommanditgesellschaft auf on August 28, 2024 and sell it today you would lose (1,804) from holding MERCK Kommanditgesellschaft auf or give up 10.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MERCK Kommanditgesellschaft au vs. Cresco Labs
Performance |
| Timeline |
| MERCK Kommanditgesells |
| Cresco Labs |
MERCK Kommanditgesells and Cresco Labs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MERCK Kommanditgesells and Cresco Labs
The main advantage of trading using opposite MERCK Kommanditgesells and Cresco Labs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MERCK Kommanditgesells position performs unexpectedly, Cresco Labs 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 Cresco Labs will offset losses from the drop in Cresco Labs' long position.| MERCK Kommanditgesells vs. Greater Cannabis | MERCK Kommanditgesells vs. Merck KGaA ADR | MERCK Kommanditgesells vs. For The Earth | MERCK Kommanditgesells vs. Indo Global Exchange |
| Cresco Labs vs. Verano Holdings Corp | Cresco Labs vs. AYR Strategies Class | Cresco Labs vs. Green Thumb Industries | Cresco Labs vs. Marimed |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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