Correlation Between Merit Medical and CDW
Can any of the company-specific risk be diversified away by investing in both Merit Medical and CDW 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 CDW 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 CDW Corporation, you can compare the effects of market volatilities on Merit Medical and CDW 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 CDW. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merit Medical and CDW.
Diversification Opportunities for Merit Medical and CDW
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Merit and CDW is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems and CDW Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDW Corporation 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 CDW. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CDW Corporation has no effect on the direction of Merit Medical i.e., Merit Medical and CDW go up and down completely randomly.
Pair Corralation between Merit Medical and CDW
Assuming the 90 days trading horizon Merit Medical Systems is expected to generate 0.82 times more return on investment than CDW. However, Merit Medical Systems is 1.22 times less risky than CDW. It trades about 0.14 of its potential returns per unit of risk. CDW Corporation is currently generating about -0.07 per unit of risk. If you would invest 7,400 in Merit Medical Systems on September 2, 2024 and sell it today you would earn a total of 2,350 from holding Merit Medical Systems or generate 31.76% 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. CDW Corp.
Performance |
| Timeline |
| Merit Medical Systems |
| CDW Corporation |
Merit Medical and CDW Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merit Medical and CDW
The main advantage of trading using opposite Merit Medical and CDW positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merit Medical position performs unexpectedly, CDW 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 CDW will offset losses from the drop in CDW's long position.| Merit Medical vs. SCANSOURCE | Merit Medical vs. The Trade Desk | Merit Medical vs. RETAIL FOOD GROUP | Merit Medical vs. CANON MARKETING JP |
| CDW vs. Superior Plus Corp | CDW vs. NMI Holdings | CDW vs. Origin Agritech | CDW vs. SIVERS SEMICONDUCTORS AB |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
Other Complementary Tools
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Money Managers Screen money managers from public funds and ETFs managed around the world |