Correlation Between Merit Medical and Tyson Foods
Can any of the company-specific risk be diversified away by investing in both Merit Medical and Tyson Foods 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 Tyson Foods 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 Tyson Foods, you can compare the effects of market volatilities on Merit Medical and Tyson Foods 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 Tyson Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merit Medical and Tyson Foods.
Diversification Opportunities for Merit Medical and Tyson Foods
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Merit and Tyson is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems and Tyson Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tyson Foods 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 Tyson Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tyson Foods has no effect on the direction of Merit Medical i.e., Merit Medical and Tyson Foods go up and down completely randomly.
Pair Corralation between Merit Medical and Tyson Foods
Assuming the 90 days trading horizon Merit Medical Systems is expected to generate 0.92 times more return on investment than Tyson Foods. However, Merit Medical Systems is 1.08 times less risky than Tyson Foods. It trades about 0.1 of its potential returns per unit of risk. Tyson Foods is currently generating about 0.04 per unit of risk. If you would invest 6,700 in Merit Medical Systems on December 7, 2024 and sell it today you would earn a total of 2,700 from holding Merit Medical Systems or generate 40.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Merit Medical Systems vs. Tyson Foods
Performance |
| Timeline |
| Merit Medical Systems |
| Tyson Foods |
Merit Medical and Tyson Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merit Medical and Tyson Foods
The main advantage of trading using opposite Merit Medical and Tyson Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merit Medical position performs unexpectedly, Tyson Foods 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 Tyson Foods will offset losses from the drop in Tyson Foods' long position.| Merit Medical vs. FANDIFI TECHNOLOGY P | Merit Medical vs. Q2M Managementberatung AG | Merit Medical vs. Computer And Technologies | Merit Medical vs. Brockhaus Capital Management |
| Tyson Foods vs. JAPAN AIRLINES | Tyson Foods vs. American Airlines Group | Tyson Foods vs. China Eastern Airlines | Tyson Foods vs. Tencent Music Entertainment |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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