Correlation Between MERCK Kommanditgesells and Leef Brands
Can any of the company-specific risk be diversified away by investing in both MERCK Kommanditgesells and Leef Brands 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 Leef Brands 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 Leef Brands, you can compare the effects of market volatilities on MERCK Kommanditgesells and Leef Brands 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 Leef Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of MERCK Kommanditgesells and Leef Brands.
Diversification Opportunities for MERCK Kommanditgesells and Leef Brands
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between MERCK and Leef is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding MERCK Kommanditgesellschaft au and Leef Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leef Brands 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 Leef Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leef Brands has no effect on the direction of MERCK Kommanditgesells i.e., MERCK Kommanditgesells and Leef Brands go up and down completely randomly.
Pair Corralation between MERCK Kommanditgesells and Leef Brands
Assuming the 90 days horizon MERCK Kommanditgesellschaft auf is expected to under-perform the Leef Brands. But the pink sheet apears to be less risky and, when comparing its historical volatility, MERCK Kommanditgesellschaft auf is 4.82 times less risky than Leef Brands. The pink sheet trades about -0.01 of its potential returns per unit of risk. The Leef Brands is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 24.00 in Leef Brands on August 25, 2024 and sell it today you would lose (8.00) from holding Leef Brands or give up 33.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.47% |
| Values | Daily Returns |
MERCK Kommanditgesellschaft au vs. Leef Brands
Performance |
| Timeline |
| MERCK Kommanditgesells |
| Leef Brands |
MERCK Kommanditgesells and Leef Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MERCK Kommanditgesells and Leef Brands
The main advantage of trading using opposite MERCK Kommanditgesells and Leef Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MERCK Kommanditgesells position performs unexpectedly, Leef Brands 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 Leef Brands will offset losses from the drop in Leef Brands' 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 |
| Leef Brands vs. Hasbro Inc | Leef Brands vs. Emerson Radio | Leef Brands vs. Playtech plc | Leef Brands vs. Cumberland Pharmaceuticals |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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