Correlation Between Merit Medical and Computer
Can any of the company-specific risk be diversified away by investing in both Merit Medical and Computer 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 Computer 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 Computer And Technologies, you can compare the effects of market volatilities on Merit Medical and Computer 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 Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merit Medical and Computer.
Diversification Opportunities for Merit Medical and Computer
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Merit and Computer is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems and Computer And Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Computer And Technologies 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 Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Computer And Technologies has no effect on the direction of Merit Medical i.e., Merit Medical and Computer go up and down completely randomly.
Pair Corralation between Merit Medical and Computer
Assuming the 90 days trading horizon Merit Medical Systems is expected to generate 0.46 times more return on investment than Computer. However, Merit Medical Systems is 2.16 times less risky than Computer. It trades about 0.1 of its potential returns per unit of risk. Computer And Technologies is currently generating about 0.02 per unit of risk. If you would invest 7,650 in Merit Medical Systems on September 21, 2024 and sell it today you would earn a total of 1,550 from holding Merit Medical Systems or generate 20.26% 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. Computer And Technologies
Performance |
| Timeline |
| Merit Medical Systems |
| Computer And Technologies |
Merit Medical and Computer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merit Medical and Computer
The main advantage of trading using opposite Merit Medical and Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merit Medical position performs unexpectedly, Computer 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 Computer will offset losses from the drop in Computer's long position.| Merit Medical vs. PARKEN Sport Entertainment | Merit Medical vs. T MOBILE US | Merit Medical vs. NTG Nordic Transport | Merit Medical vs. SBA Communications Corp |
| Computer vs. ATOSS SOFTWARE | Computer vs. Merit Medical Systems | Computer vs. Apollo Medical Holdings | Computer vs. Constellation Software |
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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