Correlation Between Merit Medical and MSP Recovery
Can any of the company-specific risk be diversified away by investing in both Merit Medical and MSP Recovery 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 MSP Recovery 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 MSP Recovery, you can compare the effects of market volatilities on Merit Medical and MSP Recovery 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 MSP Recovery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merit Medical and MSP Recovery.
Diversification Opportunities for Merit Medical and MSP Recovery
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Merit and MSP is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems and MSP Recovery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MSP Recovery 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 MSP Recovery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MSP Recovery has no effect on the direction of Merit Medical i.e., Merit Medical and MSP Recovery go up and down completely randomly.
Pair Corralation between Merit Medical and MSP Recovery
Given the investment horizon of 90 days Merit Medical is expected to generate 1.03 times less return on investment than MSP Recovery. But when comparing it to its historical volatility, Merit Medical Systems is 10.71 times less risky than MSP Recovery. It trades about 0.16 of its potential returns per unit of risk. MSP Recovery is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 0.38 in MSP Recovery on August 30, 2024 and sell it today you would lose (0.21) from holding MSP Recovery or give up 55.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merit Medical Systems vs. MSP Recovery
Performance |
| Timeline |
| Merit Medical Systems |
| MSP Recovery |
Merit Medical and MSP Recovery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merit Medical and MSP Recovery
The main advantage of trading using opposite Merit Medical and MSP Recovery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merit Medical position performs unexpectedly, MSP Recovery 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 MSP Recovery will offset losses from the drop in MSP Recovery's long position.| Merit Medical vs. ReShape Lifesciences | Merit Medical vs. Bone Biologics Corp | Merit Medical vs. Tivic Health Systems | Merit Medical vs. Nuwellis |
| MSP Recovery vs. Aptiv PLC | MSP Recovery vs. Li Auto | MSP Recovery vs. MGIC Investment Corp | MSP Recovery vs. Assurant |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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