Correlation Between Merit Medical and Cartier Iron
Can any of the company-specific risk be diversified away by investing in both Merit Medical and Cartier Iron 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 Cartier Iron 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 Cartier Iron Corp, you can compare the effects of market volatilities on Merit Medical and Cartier Iron 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 Cartier Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merit Medical and Cartier Iron.
Diversification Opportunities for Merit Medical and Cartier Iron
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Merit and Cartier is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems and Cartier Iron Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cartier Iron 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 Cartier Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cartier Iron Corp has no effect on the direction of Merit Medical i.e., Merit Medical and Cartier Iron go up and down completely randomly.
Pair Corralation between Merit Medical and Cartier Iron
Given the investment horizon of 90 days Merit Medical is expected to generate 34.73 times less return on investment than Cartier Iron. But when comparing it to its historical volatility, Merit Medical Systems is 44.15 times less risky than Cartier Iron. It trades about 0.12 of its potential returns per unit of risk. Cartier Iron Corp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 12.00 in Cartier Iron Corp on September 3, 2024 and sell it today you would lose (6.50) from holding Cartier Iron Corp or give up 54.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.46% |
| Values | Daily Returns |
Merit Medical Systems vs. Cartier Iron Corp
Performance |
| Timeline |
| Merit Medical Systems |
| Cartier Iron Corp |
Merit Medical and Cartier Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merit Medical and Cartier Iron
The main advantage of trading using opposite Merit Medical and Cartier Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merit Medical position performs unexpectedly, Cartier Iron 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 Cartier Iron will offset losses from the drop in Cartier Iron's long position.The idea behind Merit Medical Systems and Cartier Iron Corp 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.| Cartier Iron vs. Star Royalties | Cartier Iron vs. Defiance Silver Corp | Cartier Iron vs. Diamond Fields Resources | Cartier Iron vs. GoGold Resources |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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