Correlation Between Merit Medical and Talanx AG
Can any of the company-specific risk be diversified away by investing in both Merit Medical and Talanx AG 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 Talanx AG 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 Talanx AG, you can compare the effects of market volatilities on Merit Medical and Talanx AG 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 Talanx AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merit Medical and Talanx AG.
Diversification Opportunities for Merit Medical and Talanx AG
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Merit and Talanx is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems and Talanx AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Talanx AG 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 Talanx AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Talanx AG has no effect on the direction of Merit Medical i.e., Merit Medical and Talanx AG go up and down completely randomly.
Pair Corralation between Merit Medical and Talanx AG
Assuming the 90 days trading horizon Merit Medical is expected to generate 1.62 times less return on investment than Talanx AG. In addition to that, Merit Medical is 1.21 times more volatile than Talanx AG. It trades about 0.05 of its total potential returns per unit of risk. Talanx AG is currently generating about 0.11 per unit of volatility. If you would invest 4,266 in Talanx AG on October 12, 2024 and sell it today you would earn a total of 4,204 from holding Talanx AG or generate 98.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merit Medical Systems vs. Talanx AG
Performance |
| Timeline |
| Merit Medical Systems |
| Talanx AG |
Merit Medical and Talanx AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merit Medical and Talanx AG
The main advantage of trading using opposite Merit Medical and Talanx AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merit Medical position performs unexpectedly, Talanx AG 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 Talanx AG will offset losses from the drop in Talanx AG's long position.| Merit Medical vs. Addus HomeCare | Merit Medical vs. OFFICE DEPOT | Merit Medical vs. Take Two Interactive Software | Merit Medical vs. Aedas Homes SA |
| Talanx AG vs. Merit Medical Systems | Talanx AG vs. ENVVENO MEDICAL DL 00001 | Talanx AG vs. SENECA FOODS A | Talanx AG vs. COFCO Joycome Foods |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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