Correlation Between Merit Medical and Brookdale Senior
Can any of the company-specific risk be diversified away by investing in both Merit Medical and Brookdale Senior 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 Brookdale Senior 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 Brookdale Senior Living, you can compare the effects of market volatilities on Merit Medical and Brookdale Senior 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 Brookdale Senior. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merit Medical and Brookdale Senior.
Diversification Opportunities for Merit Medical and Brookdale Senior
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Merit and Brookdale is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems and Brookdale Senior Living in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookdale Senior Living 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 Brookdale Senior. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookdale Senior Living has no effect on the direction of Merit Medical i.e., Merit Medical and Brookdale Senior go up and down completely randomly.
Pair Corralation between Merit Medical and Brookdale Senior
Assuming the 90 days trading horizon Merit Medical Systems is expected to generate 0.49 times more return on investment than Brookdale Senior. However, Merit Medical Systems is 2.04 times less risky than Brookdale Senior. It trades about 0.14 of its potential returns per unit of risk. Brookdale Senior Living is currently generating about -0.06 per unit of risk. If you would invest 8,850 in Merit Medical Systems on August 30, 2024 and sell it today you would earn a total of 900.00 from holding Merit Medical Systems or generate 10.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 97.73% |
| Values | Daily Returns |
Merit Medical Systems vs. Brookdale Senior Living
Performance |
| Timeline |
| Merit Medical Systems |
| Brookdale Senior Living |
Merit Medical and Brookdale Senior Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merit Medical and Brookdale Senior
The main advantage of trading using opposite Merit Medical and Brookdale Senior positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merit Medical position performs unexpectedly, Brookdale Senior 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 Brookdale Senior will offset losses from the drop in Brookdale Senior's long position.| Merit Medical vs. Apple Inc | Merit Medical vs. Apple Inc | Merit Medical vs. Apple Inc | Merit Medical vs. Apple Inc |
| Brookdale Senior vs. ALGOMA STEEL GROUP | Brookdale Senior vs. LEGACY IRON ORE | Brookdale Senior vs. ABO GROUP ENVIRONMENT | Brookdale Senior vs. Nippon Steel |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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