Correlation Between Merit Medical and Jeld Wen
Can any of the company-specific risk be diversified away by investing in both Merit Medical and Jeld Wen 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 Jeld Wen 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 Jeld Wen Holding, you can compare the effects of market volatilities on Merit Medical and Jeld Wen 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 Jeld Wen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merit Medical and Jeld Wen.
Diversification Opportunities for Merit Medical and Jeld Wen
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Merit and Jeld is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems and Jeld Wen Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeld Wen 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 Jeld Wen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jeld Wen Holding has no effect on the direction of Merit Medical i.e., Merit Medical and Jeld Wen go up and down completely randomly.
Pair Corralation between Merit Medical and Jeld Wen
Given the investment horizon of 90 days Merit Medical Systems is expected to generate 0.16 times more return on investment than Jeld Wen. However, Merit Medical Systems is 6.31 times less risky than Jeld Wen. It trades about 0.2 of its potential returns per unit of risk. Jeld Wen Holding is currently generating about -0.12 per unit of risk. If you would invest 9,908 in Merit Medical Systems on September 3, 2024 and sell it today you would earn a total of 482.00 from holding Merit Medical Systems or generate 4.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merit Medical Systems vs. Jeld Wen Holding
Performance |
| Timeline |
| Merit Medical Systems |
| Jeld Wen Holding |
Merit Medical and Jeld Wen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merit Medical and Jeld Wen
The main advantage of trading using opposite Merit Medical and Jeld Wen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merit Medical position performs unexpectedly, Jeld Wen 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 Jeld Wen will offset losses from the drop in Jeld Wen's long position.The idea behind Merit Medical Systems and Jeld Wen Holding 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.| Jeld Wen vs. Gibraltar Industries | Jeld Wen vs. Quanex Building Products | Jeld Wen vs. Perma Pipe International Holdings | Jeld Wen vs. Interface |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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