Correlation Between Merit Medical and KENEDIX OFFICE
Can any of the company-specific risk be diversified away by investing in both Merit Medical and KENEDIX OFFICE 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 KENEDIX OFFICE 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 KENEDIX OFFICE INV, you can compare the effects of market volatilities on Merit Medical and KENEDIX OFFICE 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 KENEDIX OFFICE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merit Medical and KENEDIX OFFICE.
Diversification Opportunities for Merit Medical and KENEDIX OFFICE
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Merit and KENEDIX is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems and KENEDIX OFFICE INV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KENEDIX OFFICE INV 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 KENEDIX OFFICE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KENEDIX OFFICE INV has no effect on the direction of Merit Medical i.e., Merit Medical and KENEDIX OFFICE go up and down completely randomly.
Pair Corralation between Merit Medical and KENEDIX OFFICE
Assuming the 90 days trading horizon Merit Medical Systems is expected to generate 1.09 times more return on investment than KENEDIX OFFICE. However, Merit Medical is 1.09 times more volatile than KENEDIX OFFICE INV. It trades about 0.13 of its potential returns per unit of risk. KENEDIX OFFICE INV is currently generating about 0.01 per unit of risk. If you would invest 8,750 in Merit Medical Systems on October 25, 2024 and sell it today you would earn a total of 1,200 from holding Merit Medical Systems or generate 13.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merit Medical Systems vs. KENEDIX OFFICE INV
Performance |
| Timeline |
| Merit Medical Systems |
| KENEDIX OFFICE INV |
Merit Medical and KENEDIX OFFICE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merit Medical and KENEDIX OFFICE
The main advantage of trading using opposite Merit Medical and KENEDIX OFFICE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merit Medical position performs unexpectedly, KENEDIX OFFICE 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 KENEDIX OFFICE will offset losses from the drop in KENEDIX OFFICE's long position.| Merit Medical vs. Apple Inc | Merit Medical vs. Apple Inc | Merit Medical vs. Apple Inc | Merit Medical vs. Apple Inc |
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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