Correlation Between Merit Medical and Heartbeam
Can any of the company-specific risk be diversified away by investing in both Merit Medical and Heartbeam 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 Heartbeam 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 Heartbeam, you can compare the effects of market volatilities on Merit Medical and Heartbeam 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 Heartbeam. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merit Medical and Heartbeam.
Diversification Opportunities for Merit Medical and Heartbeam
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Merit and Heartbeam is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems and Heartbeam in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heartbeam 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 Heartbeam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heartbeam has no effect on the direction of Merit Medical i.e., Merit Medical and Heartbeam go up and down completely randomly.
Pair Corralation between Merit Medical and Heartbeam
Given the investment horizon of 90 days Merit Medical Systems is expected to generate 0.27 times more return on investment than Heartbeam. However, Merit Medical Systems is 3.65 times less risky than Heartbeam. It trades about 0.05 of its potential returns per unit of risk. Heartbeam is currently generating about 0.01 per unit of risk. If you would invest 7,245 in Merit Medical Systems on August 30, 2024 and sell it today you would earn a total of 3,121 from holding Merit Medical Systems or generate 43.08% 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. Heartbeam
Performance |
| Timeline |
| Merit Medical Systems |
| Heartbeam |
Merit Medical and Heartbeam Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merit Medical and Heartbeam
The main advantage of trading using opposite Merit Medical and Heartbeam positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merit Medical position performs unexpectedly, Heartbeam 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 Heartbeam will offset losses from the drop in Heartbeam's long position.| Merit Medical vs. Femasys | Merit Medical vs. Sharps Technology Warrant | Merit Medical vs. GlucoTrack | Merit Medical vs. Walt Disney |
| Heartbeam vs. FOXO Technologies | Heartbeam vs. EUDA Health Holdings | Heartbeam vs. Nutex Health | Heartbeam vs. Healthcare Triangle |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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