Correlation Between Merit Medical and Auddia
Can any of the company-specific risk be diversified away by investing in both Merit Medical and Auddia 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 Auddia 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 Auddia Inc, you can compare the effects of market volatilities on Merit Medical and Auddia 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 Auddia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merit Medical and Auddia.
Diversification Opportunities for Merit Medical and Auddia
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Merit and Auddia is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems and Auddia Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auddia Inc 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 Auddia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auddia Inc has no effect on the direction of Merit Medical i.e., Merit Medical and Auddia go up and down completely randomly.
Pair Corralation between Merit Medical and Auddia
Given the investment horizon of 90 days Merit Medical is expected to generate 200.98 times less return on investment than Auddia. But when comparing it to its historical volatility, Merit Medical Systems is 75.77 times less risky than Auddia. It trades about 0.05 of its potential returns per unit of risk. Auddia Inc is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 20.00 in Auddia Inc on September 3, 2024 and sell it today you would lose (18.03) from holding Auddia Inc or give up 90.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 70.71% |
| Values | Daily Returns |
Merit Medical Systems vs. Auddia Inc
Performance |
| Timeline |
| Merit Medical Systems |
| Auddia Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
Merit Medical and Auddia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merit Medical and Auddia
The main advantage of trading using opposite Merit Medical and Auddia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merit Medical position performs unexpectedly, Auddia 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 Auddia will offset losses from the drop in Auddia's long position.The idea behind Merit Medical Systems and Auddia Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Auddia vs. Xponential Fitness | Auddia vs. Anheuser Busch Inbev | Auddia vs. Waste Management | Auddia vs. Merit Medical Systems |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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