Correlation Between Merit Medical and Global E
Can any of the company-specific risk be diversified away by investing in both Merit Medical and Global E 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 Global E 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 Global E Online, you can compare the effects of market volatilities on Merit Medical and Global E 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 Global E. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merit Medical and Global E.
Diversification Opportunities for Merit Medical and Global E
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Merit and Global is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems and Global E Online in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global E Online 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 Global E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global E Online has no effect on the direction of Merit Medical i.e., Merit Medical and Global E go up and down completely randomly.
Pair Corralation between Merit Medical and Global E
Given the investment horizon of 90 days Merit Medical is expected to generate 3.55 times less return on investment than Global E. But when comparing it to its historical volatility, Merit Medical Systems is 2.23 times less risky than Global E. It trades about 0.26 of its potential returns per unit of risk. Global E Online is currently generating about 0.42 of returns per unit of risk over similar time horizon. If you would invest 3,849 in Global E Online on August 29, 2024 and sell it today you would earn a total of 1,317 from holding Global E Online or generate 34.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merit Medical Systems vs. Global E Online
Performance |
| Timeline |
| Merit Medical Systems |
| Global E Online |
Merit Medical and Global E Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merit Medical and Global E
The main advantage of trading using opposite Merit Medical and Global E positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merit Medical position performs unexpectedly, Global E 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 Global E will offset losses from the drop in Global E's long position.| Merit Medical vs. Femasys | Merit Medical vs. Sharps Technology Warrant | Merit Medical vs. GlucoTrack | Merit Medical vs. Walt Disney |
| Global E vs. MercadoLibre | Global E vs. PDD Holdings | Global E vs. JD Inc Adr | Global E vs. Alibaba Group Holding |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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