Correlation Between Merit Medical and Corporate Office
Can any of the company-specific risk be diversified away by investing in both Merit Medical and Corporate 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 Corporate 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 Corporate Office Properties, you can compare the effects of market volatilities on Merit Medical and Corporate 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 Corporate Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merit Medical and Corporate Office.
Diversification Opportunities for Merit Medical and Corporate Office
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Merit and Corporate is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems and Corporate Office Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corporate Office Pro 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 Corporate Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corporate Office Pro has no effect on the direction of Merit Medical i.e., Merit Medical and Corporate Office go up and down completely randomly.
Pair Corralation between Merit Medical and Corporate Office
Assuming the 90 days trading horizon Merit Medical is expected to generate 1.22 times less return on investment than Corporate Office. In addition to that, Merit Medical is 1.28 times more volatile than Corporate Office Properties. It trades about 0.13 of its total potential returns per unit of risk. Corporate Office Properties is currently generating about 0.21 per unit of volatility. If you would invest 2,631 in Corporate Office Properties on September 2, 2024 and sell it today you would earn a total of 449.00 from holding Corporate Office Properties or generate 17.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merit Medical Systems vs. Corporate Office Properties
Performance |
| Timeline |
| Merit Medical Systems |
| Corporate Office Pro |
Merit Medical and Corporate Office Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merit Medical and Corporate Office
The main advantage of trading using opposite Merit Medical and Corporate Office positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merit Medical position performs unexpectedly, Corporate 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 Corporate Office will offset losses from the drop in Corporate Office's long position.| Merit Medical vs. SCANSOURCE | Merit Medical vs. The Trade Desk | Merit Medical vs. RETAIL FOOD GROUP | Merit Medical vs. CANON MARKETING JP |
| Corporate Office vs. Compagnie Plastic Omnium | Corporate Office vs. Chiba Bank | Corporate Office vs. EAGLE MATERIALS | Corporate Office vs. The Hanover Insurance |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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