Correlation Between Merit Medical and Ambev SA
Can any of the company-specific risk be diversified away by investing in both Merit Medical and Ambev SA 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 Ambev SA 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 Ambev SA, you can compare the effects of market volatilities on Merit Medical and Ambev SA 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 Ambev SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merit Medical and Ambev SA.
Diversification Opportunities for Merit Medical and Ambev SA
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Merit and Ambev is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems and Ambev SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambev 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 Ambev SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambev SA has no effect on the direction of Merit Medical i.e., Merit Medical and Ambev SA go up and down completely randomly.
Pair Corralation between Merit Medical and Ambev SA
Assuming the 90 days trading horizon Merit Medical Systems is expected to generate 0.67 times more return on investment than Ambev SA. However, Merit Medical Systems is 1.49 times less risky than Ambev SA. It trades about 0.13 of its potential returns per unit of risk. Ambev SA is currently generating about -0.01 per unit of risk. If you would invest 7,800 in Merit Medical Systems on October 26, 2024 and sell it today you would earn a total of 2,000 from holding Merit Medical Systems or generate 25.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Merit Medical Systems vs. Ambev SA
Performance |
| Timeline |
| Merit Medical Systems |
| Ambev SA |
Merit Medical and Ambev SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merit Medical and Ambev SA
The main advantage of trading using opposite Merit Medical and Ambev SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merit Medical position performs unexpectedly, Ambev SA 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 Ambev SA will offset losses from the drop in Ambev SA's long position.| Merit Medical vs. MCEWEN MINING INC | Merit Medical vs. JD SPORTS FASH | Merit Medical vs. Yanzhou Coal Mining | Merit Medical vs. STGEORGE MINING LTD |
| Ambev SA vs. SAFEROADS HLDGS | Ambev SA vs. GRENKELEASING Dusseldorf | Ambev SA vs. Broadcom | Ambev SA vs. BII Railway Transportation |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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