Correlation Between Merit Medical and Citizens
Can any of the company-specific risk be diversified away by investing in both Merit Medical and Citizens 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 Citizens 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 Citizens, you can compare the effects of market volatilities on Merit Medical and Citizens 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 Citizens. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merit Medical and Citizens.
Diversification Opportunities for Merit Medical and Citizens
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Merit and Citizens is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems and Citizens in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens 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 Citizens. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citizens has no effect on the direction of Merit Medical i.e., Merit Medical and Citizens go up and down completely randomly.
Pair Corralation between Merit Medical and Citizens
Given the investment horizon of 90 days Merit Medical is expected to generate 2.11 times less return on investment than Citizens. But when comparing it to its historical volatility, Merit Medical Systems is 3.49 times less risky than Citizens. It trades about 0.15 of its potential returns per unit of risk. Citizens is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 303.00 in Citizens on September 3, 2024 and sell it today you would earn a total of 136.00 from holding Citizens or generate 44.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merit Medical Systems vs. Citizens
Performance |
| Timeline |
| Merit Medical Systems |
| Citizens |
Merit Medical and Citizens Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merit Medical and Citizens
The main advantage of trading using opposite Merit Medical and Citizens positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merit Medical position performs unexpectedly, Citizens 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 Citizens will offset losses from the drop in Citizens' long position.The idea behind Merit Medical Systems and Citizens 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.| Citizens vs. CNO Financial Group | Citizens vs. Brighthouse Financial | Citizens vs. FG Annuities Life | Citizens vs. Prudential Public Limited |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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