Correlation Between MERCK Kommanditgesells and American Green
Can any of the company-specific risk be diversified away by investing in both MERCK Kommanditgesells and American Green 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 American Green 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 American Green, you can compare the effects of market volatilities on MERCK Kommanditgesells and American Green 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 American Green. Check out your portfolio center. Please also check ongoing floating volatility patterns of MERCK Kommanditgesells and American Green.
Diversification Opportunities for MERCK Kommanditgesells and American Green
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MERCK and American is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding MERCK Kommanditgesellschaft au and American Green in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Green 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 American Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Green has no effect on the direction of MERCK Kommanditgesells i.e., MERCK Kommanditgesells and American Green go up and down completely randomly.
Pair Corralation between MERCK Kommanditgesells and American Green
Assuming the 90 days horizon MERCK Kommanditgesellschaft auf is expected to under-perform the American Green. But the pink sheet apears to be less risky and, when comparing its historical volatility, MERCK Kommanditgesellschaft auf is 9.47 times less risky than American Green. The pink sheet trades about -0.3 of its potential returns per unit of risk. The American Green is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 0.04 in American Green on August 28, 2024 and sell it today you would earn a total of 0.01 from holding American Green or generate 25.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
MERCK Kommanditgesellschaft au vs. American Green
Performance |
| Timeline |
| MERCK Kommanditgesells |
| American Green |
MERCK Kommanditgesells and American Green Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MERCK Kommanditgesells and American Green
The main advantage of trading using opposite MERCK Kommanditgesells and American Green positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MERCK Kommanditgesells position performs unexpectedly, American Green 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 American Green will offset losses from the drop in American Green's 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 |
| American Green vs. Greengro Tech | American Green vs. Growlife | American Green vs. Hemp Inc | American Green vs. Easton Pharmaceutica |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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