Correlation Between Merit Medical and Kinsale Capital
Can any of the company-specific risk be diversified away by investing in both Merit Medical and Kinsale Capital 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 Kinsale Capital 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 Kinsale Capital Group, you can compare the effects of market volatilities on Merit Medical and Kinsale Capital 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 Kinsale Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merit Medical and Kinsale Capital.
Diversification Opportunities for Merit Medical and Kinsale Capital
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Merit and Kinsale is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems and Kinsale Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinsale Capital Group 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 Kinsale Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinsale Capital Group has no effect on the direction of Merit Medical i.e., Merit Medical and Kinsale Capital go up and down completely randomly.
Pair Corralation between Merit Medical and Kinsale Capital
Given the investment horizon of 90 days Merit Medical is expected to generate 1.9 times less return on investment than Kinsale Capital. But when comparing it to its historical volatility, Merit Medical Systems is 1.55 times less risky than Kinsale Capital. It trades about 0.05 of its potential returns per unit of risk. Kinsale Capital Group is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 27,905 in Kinsale Capital Group on September 3, 2024 and sell it today you would earn a total of 22,939 from holding Kinsale Capital Group or generate 82.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merit Medical Systems vs. Kinsale Capital Group
Performance |
| Timeline |
| Merit Medical Systems |
| Kinsale Capital Group |
Merit Medical and Kinsale Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merit Medical and Kinsale Capital
The main advantage of trading using opposite Merit Medical and Kinsale Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merit Medical position performs unexpectedly, Kinsale Capital 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 Kinsale Capital will offset losses from the drop in Kinsale Capital's long position.The idea behind Merit Medical Systems and Kinsale Capital Group 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.| Kinsale Capital vs. SPACE | Kinsale Capital vs. Ampleforth | Kinsale Capital vs. ionet | Kinsale Capital vs. KIN |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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