Correlation Between Merit Medical and CAVA Group,
Can any of the company-specific risk be diversified away by investing in both Merit Medical and CAVA Group, 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 CAVA Group, 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 CAVA Group,, you can compare the effects of market volatilities on Merit Medical and CAVA Group, 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 CAVA Group,. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merit Medical and CAVA Group,.
Diversification Opportunities for Merit Medical and CAVA Group,
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Merit and CAVA is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems and CAVA Group, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAVA Group, 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 CAVA Group,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAVA Group, has no effect on the direction of Merit Medical i.e., Merit Medical and CAVA Group, go up and down completely randomly.
Pair Corralation between Merit Medical and CAVA Group,
Given the investment horizon of 90 days Merit Medical is expected to generate 3.65 times less return on investment than CAVA Group,. But when comparing it to its historical volatility, Merit Medical Systems is 2.56 times less risky than CAVA Group,. It trades about 0.13 of its potential returns per unit of risk. CAVA Group, is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 3,249 in CAVA Group, on September 4, 2024 and sell it today you would earn a total of 10,935 from holding CAVA Group, or generate 336.57% 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. CAVA Group,
Performance |
| Timeline |
| Merit Medical Systems |
| CAVA Group, |
Merit Medical and CAVA Group, Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merit Medical and CAVA Group,
The main advantage of trading using opposite Merit Medical and CAVA Group, positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merit Medical position performs unexpectedly, CAVA Group, 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 CAVA Group, will offset losses from the drop in CAVA Group,'s long position.| Merit Medical vs. Baxter International | Merit Medical vs. West Pharmaceutical Services | Merit Medical vs. ResMed Inc | Merit Medical vs. The Cooper Companies, |
| CAVA Group, vs. Tencent Music Entertainment | CAVA Group, vs. Asbury Automotive Group | CAVA Group, vs. Stagwell | CAVA Group, vs. Fluent Inc |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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