Correlation Between Merit Medical and HYATT HOTELS
Can any of the company-specific risk be diversified away by investing in both Merit Medical and HYATT HOTELS 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 HYATT HOTELS 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 HYATT HOTELS A, you can compare the effects of market volatilities on Merit Medical and HYATT HOTELS 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 HYATT HOTELS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merit Medical and HYATT HOTELS.
Diversification Opportunities for Merit Medical and HYATT HOTELS
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Merit and HYATT is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems and HYATT HOTELS A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HYATT HOTELS A 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 HYATT HOTELS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HYATT HOTELS A has no effect on the direction of Merit Medical i.e., Merit Medical and HYATT HOTELS go up and down completely randomly.
Pair Corralation between Merit Medical and HYATT HOTELS
Assuming the 90 days trading horizon Merit Medical is expected to generate 1.43 times less return on investment than HYATT HOTELS. In addition to that, Merit Medical is 1.01 times more volatile than HYATT HOTELS A. It trades about 0.22 of its total potential returns per unit of risk. HYATT HOTELS A is currently generating about 0.31 per unit of volatility. If you would invest 13,107 in HYATT HOTELS A on September 3, 2024 and sell it today you would earn a total of 1,728 from holding HYATT HOTELS A or generate 13.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merit Medical Systems vs. HYATT HOTELS A
Performance |
| Timeline |
| Merit Medical Systems |
| HYATT HOTELS A |
Merit Medical and HYATT HOTELS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merit Medical and HYATT HOTELS
The main advantage of trading using opposite Merit Medical and HYATT HOTELS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merit Medical position performs unexpectedly, HYATT HOTELS 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 HYATT HOTELS will offset losses from the drop in HYATT HOTELS's long position.| Merit Medical vs. Apple Inc | Merit Medical vs. Apple Inc | Merit Medical vs. Apple Inc | Merit Medical vs. Apple Inc |
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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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