Correlation Between Merit Medical and Air Canada
Can any of the company-specific risk be diversified away by investing in both Merit Medical and Air Canada 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 Air Canada 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 Air Canada, you can compare the effects of market volatilities on Merit Medical and Air Canada 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 Air Canada. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merit Medical and Air Canada.
Diversification Opportunities for Merit Medical and Air Canada
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Merit and Air is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems and Air Canada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Canada 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 Air Canada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Canada has no effect on the direction of Merit Medical i.e., Merit Medical and Air Canada go up and down completely randomly.
Pair Corralation between Merit Medical and Air Canada
Assuming the 90 days trading horizon Merit Medical is expected to generate 1.22 times less return on investment than Air Canada. But when comparing it to its historical volatility, Merit Medical Systems is 1.65 times less risky than Air Canada. It trades about 0.14 of its potential returns per unit of risk. Air Canada is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,225 in Air Canada on September 2, 2024 and sell it today you would earn a total of 450.00 from holding Air Canada or generate 36.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merit Medical Systems vs. Air Canada
Performance |
| Timeline |
| Merit Medical Systems |
| Air Canada |
Merit Medical and Air Canada Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merit Medical and Air Canada
The main advantage of trading using opposite Merit Medical and Air Canada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merit Medical position performs unexpectedly, Air Canada 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 Air Canada will offset losses from the drop in Air Canada's long position.| Merit Medical vs. SCANSOURCE | Merit Medical vs. The Trade Desk | Merit Medical vs. RETAIL FOOD GROUP | Merit Medical vs. CANON MARKETING JP |
| Air Canada vs. X FAB Silicon Foundries | Air Canada vs. SMA Solar Technology | Air Canada vs. Computer And Technologies | Air Canada vs. DXC Technology Co |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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