Correlation Between Merit Medical and ArcelorMittal
Can any of the company-specific risk be diversified away by investing in both Merit Medical and ArcelorMittal 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 ArcelorMittal 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 ArcelorMittal, you can compare the effects of market volatilities on Merit Medical and ArcelorMittal 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 ArcelorMittal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merit Medical and ArcelorMittal.
Diversification Opportunities for Merit Medical and ArcelorMittal
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Merit and ArcelorMittal is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems and ArcelorMittal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ArcelorMittal 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 ArcelorMittal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ArcelorMittal has no effect on the direction of Merit Medical i.e., Merit Medical and ArcelorMittal go up and down completely randomly.
Pair Corralation between Merit Medical and ArcelorMittal
Assuming the 90 days trading horizon Merit Medical Systems is expected to generate 0.96 times more return on investment than ArcelorMittal. However, Merit Medical Systems is 1.04 times less risky than ArcelorMittal. It trades about 0.05 of its potential returns per unit of risk. ArcelorMittal is currently generating about 0.01 per unit of risk. If you would invest 7,600 in Merit Medical Systems on August 29, 2024 and sell it today you would earn a total of 2,200 from holding Merit Medical Systems or generate 28.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merit Medical Systems vs. ArcelorMittal
Performance |
| Timeline |
| Merit Medical Systems |
| ArcelorMittal |
Merit Medical and ArcelorMittal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merit Medical and ArcelorMittal
The main advantage of trading using opposite Merit Medical and ArcelorMittal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merit Medical position performs unexpectedly, ArcelorMittal 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 ArcelorMittal will offset losses from the drop in ArcelorMittal's long position.| Merit Medical vs. Apple Inc | Merit Medical vs. Apple Inc | Merit Medical vs. Apple Inc | Merit Medical 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios |