Correlation Between Merit Medical and Apple
Can any of the company-specific risk be diversified away by investing in both Merit Medical and Apple 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 Apple 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 Apple Inc, you can compare the effects of market volatilities on Merit Medical and Apple 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 Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merit Medical and Apple.
Diversification Opportunities for Merit Medical and Apple
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Merit and Apple is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc 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 Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of Merit Medical i.e., Merit Medical and Apple go up and down completely randomly.
Pair Corralation between Merit Medical and Apple
Assuming the 90 days trading horizon Merit Medical is expected to generate 1.17 times less return on investment than Apple. In addition to that, Merit Medical is 1.13 times more volatile than Apple Inc. It trades about 0.05 of its total potential returns per unit of risk. Apple Inc is currently generating about 0.07 per unit of volatility. If you would invest 13,817 in Apple Inc on August 26, 2024 and sell it today you would earn a total of 8,248 from holding Apple Inc or generate 59.69% 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. Apple Inc
Performance |
| Timeline |
| Merit Medical Systems |
| Apple Inc |
Merit Medical and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merit Medical and Apple
The main advantage of trading using opposite Merit Medical and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merit Medical position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.| Merit Medical vs. Apple Inc | Merit Medical vs. Apple Inc | Merit Medical vs. Apple Inc | Merit Medical vs. Apple Inc |
| Apple vs. Samsung Electronics Co | Apple vs. Samsung Electronics Co | Apple vs. Samsung Electronics Co | Apple vs. Samsung Electronics 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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