Correlation Between Merit Medical and Ballys Corp
Can any of the company-specific risk be diversified away by investing in both Merit Medical and Ballys Corp 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 Ballys Corp 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 Ballys Corp, you can compare the effects of market volatilities on Merit Medical and Ballys Corp 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 Ballys Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merit Medical and Ballys Corp.
Diversification Opportunities for Merit Medical and Ballys Corp
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Merit and Ballys is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems and Ballys Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ballys Corp 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 Ballys Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ballys Corp has no effect on the direction of Merit Medical i.e., Merit Medical and Ballys Corp go up and down completely randomly.
Pair Corralation between Merit Medical and Ballys Corp
Given the investment horizon of 90 days Merit Medical Systems is expected to generate 5.86 times more return on investment than Ballys Corp. However, Merit Medical is 5.86 times more volatile than Ballys Corp. It trades about 0.21 of its potential returns per unit of risk. Ballys Corp is currently generating about 0.45 per unit of risk. If you would invest 9,761 in Merit Medical Systems on October 22, 2024 and sell it today you would earn a total of 529.00 from holding Merit Medical Systems or generate 5.42% 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. Ballys Corp
Performance |
| Timeline |
| Merit Medical Systems |
| Ballys Corp |
Merit Medical and Ballys Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merit Medical and Ballys Corp
The main advantage of trading using opposite Merit Medical and Ballys Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merit Medical position performs unexpectedly, Ballys Corp 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 Ballys Corp will offset losses from the drop in Ballys Corp'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 |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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