Correlation Between Merit Medical and Flexible Solutions
Can any of the company-specific risk be diversified away by investing in both Merit Medical and Flexible Solutions 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 Flexible Solutions 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 Flexible Solutions International, you can compare the effects of market volatilities on Merit Medical and Flexible Solutions 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 Flexible Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merit Medical and Flexible Solutions.
Diversification Opportunities for Merit Medical and Flexible Solutions
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Merit and Flexible is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems and Flexible Solutions Internation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flexible Solutions 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 Flexible Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flexible Solutions has no effect on the direction of Merit Medical i.e., Merit Medical and Flexible Solutions go up and down completely randomly.
Pair Corralation between Merit Medical and Flexible Solutions
Given the investment horizon of 90 days Merit Medical is expected to generate 2.99 times less return on investment than Flexible Solutions. But when comparing it to its historical volatility, Merit Medical Systems is 3.35 times less risky than Flexible Solutions. It trades about 0.16 of its potential returns per unit of risk. Flexible Solutions International is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 218.00 in Flexible Solutions International on August 30, 2024 and sell it today you would earn a total of 187.00 from holding Flexible Solutions International or generate 85.78% 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. Flexible Solutions Internation
Performance |
| Timeline |
| Merit Medical Systems |
| Flexible Solutions |
Merit Medical and Flexible Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merit Medical and Flexible Solutions
The main advantage of trading using opposite Merit Medical and Flexible Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merit Medical position performs unexpectedly, Flexible Solutions 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 Flexible Solutions will offset losses from the drop in Flexible Solutions' long position.| Merit Medical vs. ReShape Lifesciences | Merit Medical vs. Bone Biologics Corp | Merit Medical vs. Tivic Health Systems | Merit Medical vs. Nuwellis |
| Flexible Solutions vs. Orion Engineered Carbons | Flexible Solutions vs. International Flavors Fragrances | Flexible Solutions vs. Sociedad Quimica y | Flexible Solutions vs. Albemarle Corp |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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