Correlation Between Merit Medical and MusclePharm
Can any of the company-specific risk be diversified away by investing in both Merit Medical and MusclePharm 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 MusclePharm 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 MusclePharm, you can compare the effects of market volatilities on Merit Medical and MusclePharm 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 MusclePharm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merit Medical and MusclePharm.
Diversification Opportunities for Merit Medical and MusclePharm
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Merit and MusclePharm is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems and MusclePharm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MusclePharm 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 MusclePharm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MusclePharm has no effect on the direction of Merit Medical i.e., Merit Medical and MusclePharm go up and down completely randomly.
Pair Corralation between Merit Medical and MusclePharm
Given the investment horizon of 90 days Merit Medical is expected to generate 64.03 times less return on investment than MusclePharm. But when comparing it to its historical volatility, Merit Medical Systems is 45.0 times less risky than MusclePharm. It trades about 0.05 of its potential returns per unit of risk. MusclePharm is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 0.30 in MusclePharm on September 4, 2024 and sell it today you would lose (0.30) from holding MusclePharm or give up 100.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 84.99% |
| Values | Daily Returns |
Merit Medical Systems vs. MusclePharm
Performance |
| Timeline |
| Merit Medical Systems |
| MusclePharm |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Merit Medical and MusclePharm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merit Medical and MusclePharm
The main advantage of trading using opposite Merit Medical and MusclePharm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merit Medical position performs unexpectedly, MusclePharm 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 MusclePharm will offset losses from the drop in MusclePharm's long position.| Merit Medical vs. Baxter International | Merit Medical vs. West Pharmaceutical Services | Merit Medical vs. ResMed Inc | Merit Medical vs. The Cooper Companies, |
| MusclePharm vs. Black Hills | MusclePharm vs. WiMi Hologram Cloud | MusclePharm vs. Fidus Investment Corp | MusclePharm vs. Radcom |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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