Correlation Between Merit Medical and Enzolytics
Can any of the company-specific risk be diversified away by investing in both Merit Medical and Enzolytics 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 Enzolytics 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 Enzolytics, you can compare the effects of market volatilities on Merit Medical and Enzolytics 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 Enzolytics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merit Medical and Enzolytics.
Diversification Opportunities for Merit Medical and Enzolytics
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Merit and Enzolytics is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems and Enzolytics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enzolytics 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 Enzolytics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enzolytics has no effect on the direction of Merit Medical i.e., Merit Medical and Enzolytics go up and down completely randomly.
Pair Corralation between Merit Medical and Enzolytics
Given the investment horizon of 90 days Merit Medical Systems is expected to generate 0.13 times more return on investment than Enzolytics. However, Merit Medical Systems is 7.51 times less risky than Enzolytics. It trades about 0.21 of its potential returns per unit of risk. Enzolytics is currently generating about -0.21 per unit of risk. If you would invest 9,866 in Merit Medical Systems on September 1, 2024 and sell it today you would earn a total of 524.00 from holding Merit Medical Systems or generate 5.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Merit Medical Systems vs. Enzolytics
Performance |
| Timeline |
| Merit Medical Systems |
| Enzolytics |
Merit Medical and Enzolytics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merit Medical and Enzolytics
The main advantage of trading using opposite Merit Medical and Enzolytics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merit Medical position performs unexpectedly, Enzolytics 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 Enzolytics will offset losses from the drop in Enzolytics' long position.| Merit Medical vs. Teleflex Incorporated | Merit Medical vs. The Cooper Companies, | Merit Medical vs. West Pharmaceutical Services | Merit Medical vs. ICU Medical |
| Enzolytics vs. Rigel Pharmaceuticals | Enzolytics vs. Geron | Enzolytics vs. Verastem | Enzolytics vs. Immutep Ltd ADR |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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