Correlation Between Merit Medical and LAir Liquide
Can any of the company-specific risk be diversified away by investing in both Merit Medical and LAir Liquide 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 LAir Liquide 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 LAir Liquide SA, you can compare the effects of market volatilities on Merit Medical and LAir Liquide 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 LAir Liquide. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merit Medical and LAir Liquide.
Diversification Opportunities for Merit Medical and LAir Liquide
-0.89 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Merit and LAir is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems and LAir Liquide SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LAir Liquide SA 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 LAir Liquide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LAir Liquide SA has no effect on the direction of Merit Medical i.e., Merit Medical and LAir Liquide go up and down completely randomly.
Pair Corralation between Merit Medical and LAir Liquide
Assuming the 90 days trading horizon Merit Medical Systems is expected to generate 1.54 times more return on investment than LAir Liquide. However, Merit Medical is 1.54 times more volatile than LAir Liquide SA. It trades about 0.06 of its potential returns per unit of risk. LAir Liquide SA is currently generating about 0.06 per unit of risk. If you would invest 6,550 in Merit Medical Systems on September 14, 2024 and sell it today you would earn a total of 3,350 from holding Merit Medical Systems or generate 51.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merit Medical Systems vs. LAir Liquide SA
Performance |
| Timeline |
| Merit Medical Systems |
| LAir Liquide SA |
Merit Medical and LAir Liquide Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merit Medical and LAir Liquide
The main advantage of trading using opposite Merit Medical and LAir Liquide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merit Medical position performs unexpectedly, LAir Liquide 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 LAir Liquide will offset losses from the drop in LAir Liquide's long position.| Merit Medical vs. Apple Inc | Merit Medical vs. Apple Inc | Merit Medical vs. Apple Inc | Merit Medical vs. Apple Inc |
| LAir Liquide vs. Apple Inc | LAir Liquide vs. Apple Inc | LAir Liquide vs. Apple Inc | LAir Liquide vs. Apple Inc |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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