Correlation Between Merit Medical and ATRION
Can any of the company-specific risk be diversified away by investing in both Merit Medical and ATRION 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 ATRION 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 ATRION, you can compare the effects of market volatilities on Merit Medical and ATRION 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 ATRION. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merit Medical and ATRION.
Diversification Opportunities for Merit Medical and ATRION
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Merit and ATRION is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems and ATRION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATRION 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 ATRION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATRION has no effect on the direction of Merit Medical i.e., Merit Medical and ATRION go up and down completely randomly.
Pair Corralation between Merit Medical and ATRION
Given the investment horizon of 90 days Merit Medical Systems is expected to generate 0.19 times more return on investment than ATRION. However, Merit Medical Systems is 5.19 times less risky than ATRION. It trades about 0.11 of its potential returns per unit of risk. ATRION is currently generating about -0.03 per unit of risk. If you would invest 7,053 in Merit Medical Systems on August 24, 2024 and sell it today you would earn a total of 3,422 from holding Merit Medical Systems or generate 48.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 73.6% |
| Values | Daily Returns |
Merit Medical Systems vs. ATRION
Performance |
| Timeline |
| Merit Medical Systems |
| ATRION |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Merit Medical and ATRION Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merit Medical and ATRION
The main advantage of trading using opposite Merit Medical and ATRION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merit Medical position performs unexpectedly, ATRION 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 ATRION will offset losses from the drop in ATRION'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 |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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