Correlation Between Merit Medical and Grocery Outlet
Can any of the company-specific risk be diversified away by investing in both Merit Medical and Grocery Outlet 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 Grocery Outlet 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 Grocery Outlet Holding, you can compare the effects of market volatilities on Merit Medical and Grocery Outlet 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 Grocery Outlet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merit Medical and Grocery Outlet.
Diversification Opportunities for Merit Medical and Grocery Outlet
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Merit and Grocery is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems and Grocery Outlet Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grocery Outlet Holding 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 Grocery Outlet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grocery Outlet Holding has no effect on the direction of Merit Medical i.e., Merit Medical and Grocery Outlet go up and down completely randomly.
Pair Corralation between Merit Medical and Grocery Outlet
Given the investment horizon of 90 days Merit Medical Systems is expected to generate 0.67 times more return on investment than Grocery Outlet. However, Merit Medical Systems is 1.49 times less risky than Grocery Outlet. It trades about 0.05 of its potential returns per unit of risk. Grocery Outlet Holding is currently generating about -0.01 per unit of risk. If you would invest 7,301 in Merit Medical Systems on August 29, 2024 and sell it today you would earn a total of 3,065 from holding Merit Medical Systems or generate 41.98% 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. Grocery Outlet Holding
Performance |
| Timeline |
| Merit Medical Systems |
| Grocery Outlet Holding |
Merit Medical and Grocery Outlet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merit Medical and Grocery Outlet
The main advantage of trading using opposite Merit Medical and Grocery Outlet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merit Medical position performs unexpectedly, Grocery Outlet 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 Grocery Outlet will offset losses from the drop in Grocery Outlet's long position.| Merit Medical vs. Femasys | Merit Medical vs. Sharps Technology Warrant | Merit Medical vs. GlucoTrack | Merit Medical vs. Walt Disney |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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