Correlation Between Merit Medical and Natural Alternatives
Can any of the company-specific risk be diversified away by investing in both Merit Medical and Natural Alternatives 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 Natural Alternatives 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 Natural Alternatives International, you can compare the effects of market volatilities on Merit Medical and Natural Alternatives 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 Natural Alternatives. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merit Medical and Natural Alternatives.
Diversification Opportunities for Merit Medical and Natural Alternatives
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Merit and Natural is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems and Natural Alternatives Internati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natural Alternatives 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 Natural Alternatives. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natural Alternatives has no effect on the direction of Merit Medical i.e., Merit Medical and Natural Alternatives go up and down completely randomly.
Pair Corralation between Merit Medical and Natural Alternatives
Given the investment horizon of 90 days Merit Medical Systems is expected to generate 0.52 times more return on investment than Natural Alternatives. However, Merit Medical Systems is 1.94 times less risky than Natural Alternatives. It trades about 0.05 of its potential returns per unit of risk. Natural Alternatives International is currently generating about -0.02 per unit of risk. If you would invest 7,301 in Merit Medical Systems on August 29, 2024 and sell it today you would earn a total of 3,065 from holding Merit Medical Systems or generate 41.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merit Medical Systems vs. Natural Alternatives Internati
Performance |
| Timeline |
| Merit Medical Systems |
| Natural Alternatives |
Merit Medical and Natural Alternatives Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merit Medical and Natural Alternatives
The main advantage of trading using opposite Merit Medical and Natural Alternatives positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merit Medical position performs unexpectedly, Natural Alternatives 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 Natural Alternatives will offset losses from the drop in Natural Alternatives' long position.| Merit Medical vs. Femasys | Merit Medical vs. Sharps Technology Warrant | Merit Medical vs. GlucoTrack | Merit Medical vs. Walt Disney |
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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