Correlation Between Merit Medical and AlphaTime Acquisition
Can any of the company-specific risk be diversified away by investing in both Merit Medical and AlphaTime Acquisition 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 AlphaTime Acquisition 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 AlphaTime Acquisition Corp, you can compare the effects of market volatilities on Merit Medical and AlphaTime Acquisition 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 AlphaTime Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merit Medical and AlphaTime Acquisition.
Diversification Opportunities for Merit Medical and AlphaTime Acquisition
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Merit and AlphaTime is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems and AlphaTime Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AlphaTime Acquisition 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 AlphaTime Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AlphaTime Acquisition has no effect on the direction of Merit Medical i.e., Merit Medical and AlphaTime Acquisition go up and down completely randomly.
Pair Corralation between Merit Medical and AlphaTime Acquisition
Given the investment horizon of 90 days Merit Medical Systems is expected to generate 7.18 times more return on investment than AlphaTime Acquisition. However, Merit Medical is 7.18 times more volatile than AlphaTime Acquisition Corp. It trades about 0.06 of its potential returns per unit of risk. AlphaTime Acquisition Corp is currently generating about 0.18 per unit of risk. If you would invest 10,410 in Merit Medical Systems on September 12, 2024 and sell it today you would earn a total of 142.00 from holding Merit Medical Systems or generate 1.36% 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. AlphaTime Acquisition Corp
Performance |
| Timeline |
| Merit Medical Systems |
| AlphaTime Acquisition |
Merit Medical and AlphaTime Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merit Medical and AlphaTime Acquisition
The main advantage of trading using opposite Merit Medical and AlphaTime Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merit Medical position performs unexpectedly, AlphaTime Acquisition 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 AlphaTime Acquisition will offset losses from the drop in AlphaTime Acquisition's long position.| Merit Medical vs. Teleflex Incorporated | Merit Medical vs. The Cooper Companies, | Merit Medical vs. West Pharmaceutical Services | Merit Medical vs. ICU Medical |
| AlphaTime Acquisition vs. HUMANA INC | AlphaTime Acquisition vs. Barloworld Ltd ADR | AlphaTime Acquisition vs. Morningstar Unconstrained Allocation | AlphaTime Acquisition vs. Thrivent High Yield |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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