Correlation Between Merit Medical and ELEMENT FLEET
Can any of the company-specific risk be diversified away by investing in both Merit Medical and ELEMENT FLEET 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 ELEMENT FLEET 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 ELEMENT FLEET MGMT, you can compare the effects of market volatilities on Merit Medical and ELEMENT FLEET 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 ELEMENT FLEET. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merit Medical and ELEMENT FLEET.
Diversification Opportunities for Merit Medical and ELEMENT FLEET
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Merit and ELEMENT is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems and ELEMENT FLEET MGMT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ELEMENT FLEET MGMT 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 ELEMENT FLEET. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ELEMENT FLEET MGMT has no effect on the direction of Merit Medical i.e., Merit Medical and ELEMENT FLEET go up and down completely randomly.
Pair Corralation between Merit Medical and ELEMENT FLEET
Assuming the 90 days trading horizon Merit Medical Systems is expected to generate 0.64 times more return on investment than ELEMENT FLEET. However, Merit Medical Systems is 1.55 times less risky than ELEMENT FLEET. It trades about 0.15 of its potential returns per unit of risk. ELEMENT FLEET MGMT is currently generating about 0.08 per unit of risk. If you would invest 7,500 in Merit Medical Systems on September 3, 2024 and sell it today you would earn a total of 2,400 from holding Merit Medical Systems or generate 32.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merit Medical Systems vs. ELEMENT FLEET MGMT
Performance |
| Timeline |
| Merit Medical Systems |
| ELEMENT FLEET MGMT |
Merit Medical and ELEMENT FLEET Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merit Medical and ELEMENT FLEET
The main advantage of trading using opposite Merit Medical and ELEMENT FLEET positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merit Medical position performs unexpectedly, ELEMENT FLEET 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 ELEMENT FLEET will offset losses from the drop in ELEMENT FLEET's long position.| Merit Medical vs. Apple Inc | Merit Medical vs. Apple Inc | Merit Medical vs. Apple Inc | Merit Medical vs. Apple Inc |
| ELEMENT FLEET vs. Taiwan Semiconductor Manufacturing | ELEMENT FLEET vs. FAST RETAIL ADR | ELEMENT FLEET vs. MagnaChip Semiconductor Corp | ELEMENT FLEET vs. Tower Semiconductor |
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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