Correlation Between Merit Medical and MeVis Medical
Can any of the company-specific risk be diversified away by investing in both Merit Medical and MeVis Medical 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 MeVis Medical 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 MeVis Medical Solutions, you can compare the effects of market volatilities on Merit Medical and MeVis Medical 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 MeVis Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merit Medical and MeVis Medical.
Diversification Opportunities for Merit Medical and MeVis Medical
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Merit and MeVis is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems and MeVis Medical Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MeVis Medical Solutions 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 MeVis Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MeVis Medical Solutions has no effect on the direction of Merit Medical i.e., Merit Medical and MeVis Medical go up and down completely randomly.
Pair Corralation between Merit Medical and MeVis Medical
Assuming the 90 days trading horizon Merit Medical Systems is expected to generate 2.59 times more return on investment than MeVis Medical. However, Merit Medical is 2.59 times more volatile than MeVis Medical Solutions. It trades about 0.25 of its potential returns per unit of risk. MeVis Medical Solutions is currently generating about 0.0 per unit of risk. If you would invest 8,700 in Merit Medical Systems on August 29, 2024 and sell it today you would earn a total of 1,100 from holding Merit Medical Systems or generate 12.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merit Medical Systems vs. MeVis Medical Solutions
Performance |
| Timeline |
| Merit Medical Systems |
| MeVis Medical Solutions |
Merit Medical and MeVis Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merit Medical and MeVis Medical
The main advantage of trading using opposite Merit Medical and MeVis Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merit Medical position performs unexpectedly, MeVis Medical 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 MeVis Medical will offset losses from the drop in MeVis Medical's long position.| Merit Medical vs. Apple Inc | Merit Medical vs. Apple Inc | Merit Medical vs. Apple Inc | Merit Medical vs. Apple Inc |
| MeVis Medical vs. Apple Inc | MeVis Medical vs. Apple Inc | MeVis Medical vs. Apple Inc | MeVis Medical vs. Apple Inc |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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