Correlation Between Merit Medical and Aerofoam Metals
Can any of the company-specific risk be diversified away by investing in both Merit Medical and Aerofoam Metals 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 Aerofoam Metals 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 Aerofoam Metals, you can compare the effects of market volatilities on Merit Medical and Aerofoam Metals 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 Aerofoam Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merit Medical and Aerofoam Metals.
Diversification Opportunities for Merit Medical and Aerofoam Metals
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Merit and Aerofoam is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems and Aerofoam Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aerofoam Metals 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 Aerofoam Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aerofoam Metals has no effect on the direction of Merit Medical i.e., Merit Medical and Aerofoam Metals go up and down completely randomly.
Pair Corralation between Merit Medical and Aerofoam Metals
Given the investment horizon of 90 days Merit Medical Systems is expected to generate 0.37 times more return on investment than Aerofoam Metals. However, Merit Medical Systems is 2.72 times less risky than Aerofoam Metals. It trades about 0.04 of its potential returns per unit of risk. Aerofoam Metals is currently generating about -0.05 per unit of risk. If you would invest 8,426 in Merit Medical Systems on August 31, 2024 and sell it today you would earn a total of 1,964 from holding Merit Medical Systems or generate 23.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Merit Medical Systems vs. Aerofoam Metals
Performance |
| Timeline |
| Merit Medical Systems |
| Aerofoam Metals |
Merit Medical and Aerofoam Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merit Medical and Aerofoam Metals
The main advantage of trading using opposite Merit Medical and Aerofoam Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merit Medical position performs unexpectedly, Aerofoam Metals 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 Aerofoam Metals will offset losses from the drop in Aerofoam Metals' long position.| Merit Medical vs. Teleflex Incorporated | Merit Medical vs. The Cooper Companies, | Merit Medical vs. West Pharmaceutical Services | Merit Medical vs. ICU Medical |
| Aerofoam Metals vs. Porsche Automobile Holding | Aerofoam Metals vs. Ferrari NV | Aerofoam Metals vs. Toyota Motor | Aerofoam Metals vs. General Motors |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
Other Complementary Tools
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |