Correlation Between Merit Medical and Monogram Orthopaedics
Can any of the company-specific risk be diversified away by investing in both Merit Medical and Monogram Orthopaedics 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 Monogram Orthopaedics 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 Monogram Orthopaedics Common, you can compare the effects of market volatilities on Merit Medical and Monogram Orthopaedics 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 Monogram Orthopaedics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merit Medical and Monogram Orthopaedics.
Diversification Opportunities for Merit Medical and Monogram Orthopaedics
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Merit and Monogram is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems and Monogram Orthopaedics Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monogram Orthopaedics 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 Monogram Orthopaedics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monogram Orthopaedics has no effect on the direction of Merit Medical i.e., Merit Medical and Monogram Orthopaedics go up and down completely randomly.
Pair Corralation between Merit Medical and Monogram Orthopaedics
Given the investment horizon of 90 days Merit Medical Systems is expected to generate 0.46 times more return on investment than Monogram Orthopaedics. However, Merit Medical Systems is 2.2 times less risky than Monogram Orthopaedics. It trades about 0.2 of its potential returns per unit of risk. Monogram Orthopaedics Common is currently generating about -0.23 per unit of risk. If you would invest 9,880 in Merit Medical Systems on September 2, 2024 and sell it today you would earn a total of 510.00 from holding Merit Medical Systems or generate 5.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merit Medical Systems vs. Monogram Orthopaedics Common
Performance |
| Timeline |
| Merit Medical Systems |
| Monogram Orthopaedics |
Merit Medical and Monogram Orthopaedics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merit Medical and Monogram Orthopaedics
The main advantage of trading using opposite Merit Medical and Monogram Orthopaedics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merit Medical position performs unexpectedly, Monogram Orthopaedics 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 Monogram Orthopaedics will offset losses from the drop in Monogram Orthopaedics' long position.| Merit Medical vs. Profound Medical Corp | Merit Medical vs. Si Bone | Merit Medical vs. Nevro Corp | Merit Medical vs. Orthopediatrics Corp |
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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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