Correlation Between Merit Medical and FARM 51
Can any of the company-specific risk be diversified away by investing in both Merit Medical and FARM 51 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 FARM 51 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 FARM 51 GROUP, you can compare the effects of market volatilities on Merit Medical and FARM 51 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 FARM 51. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merit Medical and FARM 51.
Diversification Opportunities for Merit Medical and FARM 51
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Merit and FARM is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems and FARM 51 GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FARM 51 GROUP 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 FARM 51. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FARM 51 GROUP has no effect on the direction of Merit Medical i.e., Merit Medical and FARM 51 go up and down completely randomly.
Pair Corralation between Merit Medical and FARM 51
Assuming the 90 days trading horizon Merit Medical Systems is expected to under-perform the FARM 51. But the stock apears to be less risky and, when comparing its historical volatility, Merit Medical Systems is 1.27 times less risky than FARM 51. The stock trades about -0.19 of its potential returns per unit of risk. The FARM 51 GROUP is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest 300.00 in FARM 51 GROUP on October 14, 2024 and sell it today you would lose (10.00) from holding FARM 51 GROUP or give up 3.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merit Medical Systems vs. FARM 51 GROUP
Performance |
| Timeline |
| Merit Medical Systems |
| FARM 51 GROUP |
Merit Medical and FARM 51 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merit Medical and FARM 51
The main advantage of trading using opposite Merit Medical and FARM 51 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merit Medical position performs unexpectedly, FARM 51 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 FARM 51 will offset losses from the drop in FARM 51's long position.| Merit Medical vs. Forsys Metals Corp | Merit Medical vs. JD SPORTS FASH | Merit Medical vs. Transport International Holdings | Merit Medical vs. ADRIATIC METALS LS 013355 |
| FARM 51 vs. Merit Medical Systems | FARM 51 vs. PEPTONIC MEDICAL | FARM 51 vs. Inspire Medical Systems | FARM 51 vs. Fevertree Drinks PLC |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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