Correlation Between Merit Medical and ABERFORTH SMCOS
Can any of the company-specific risk be diversified away by investing in both Merit Medical and ABERFORTH SMCOS 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 Merit Medical and ABERFORTH SMCOS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merit Medical Systems and ABERFORTH SMCOS TRLS 01, you can compare the effects of market volatilities on Merit Medical and ABERFORTH SMCOS 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 Merit Medical with a short position of ABERFORTH SMCOS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merit Medical and ABERFORTH SMCOS.
Diversification Opportunities for Merit Medical and ABERFORTH SMCOS
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Merit and ABERFORTH is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems and ABERFORTH SMCOS TRLS 01 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABERFORTH SMCOS TRLS and Merit Medical 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 Merit Medical Systems are associated (or correlated) with ABERFORTH SMCOS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABERFORTH SMCOS TRLS has no effect on the direction of Merit Medical i.e., Merit Medical and ABERFORTH SMCOS go up and down completely randomly.
Pair Corralation between Merit Medical and ABERFORTH SMCOS
Assuming the 90 days trading horizon Merit Medical Systems is expected to under-perform the ABERFORTH SMCOS. In addition to that, Merit Medical is 1.39 times more volatile than ABERFORTH SMCOS TRLS 01. It trades about -0.32 of its total potential returns per unit of risk. ABERFORTH SMCOS TRLS 01 is currently generating about -0.22 per unit of volatility. If you would invest 1,800 in ABERFORTH SMCOS TRLS 01 on October 11, 2024 and sell it today you would lose (60.00) from holding ABERFORTH SMCOS TRLS 01 or give up 3.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merit Medical Systems vs. ABERFORTH SMCOS TRLS 01
Performance |
| Timeline |
| Merit Medical Systems |
| ABERFORTH SMCOS TRLS |
Merit Medical and ABERFORTH SMCOS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merit Medical and ABERFORTH SMCOS
The main advantage of trading using opposite Merit Medical and ABERFORTH SMCOS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merit Medical position performs unexpectedly, ABERFORTH SMCOS 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 ABERFORTH SMCOS will offset losses from the drop in ABERFORTH SMCOS's long position.| Merit Medical vs. Townsquare Media | Merit Medical vs. Luckin Coffee | Merit Medical vs. Seven West Media | Merit Medical vs. PARKEN Sport Entertainment |
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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