Correlation Between Merit Medical and Procter Gamble
Can any of the company-specific risk be diversified away by investing in both Merit Medical and Procter Gamble 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 Procter Gamble 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 Procter Gamble, you can compare the effects of market volatilities on Merit Medical and Procter Gamble 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 Procter Gamble. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merit Medical and Procter Gamble.
Diversification Opportunities for Merit Medical and Procter Gamble
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Merit and Procter is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems and Procter Gamble in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Procter Gamble 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 Procter Gamble. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Procter Gamble has no effect on the direction of Merit Medical i.e., Merit Medical and Procter Gamble go up and down completely randomly.
Pair Corralation between Merit Medical and Procter Gamble
Given the investment horizon of 90 days Merit Medical is expected to generate 1.61 times less return on investment than Procter Gamble. In addition to that, Merit Medical is 1.08 times more volatile than Procter Gamble. It trades about 0.2 of its total potential returns per unit of risk. Procter Gamble is currently generating about 0.36 per unit of volatility. If you would invest 16,510 in Procter Gamble on September 2, 2024 and sell it today you would earn a total of 1,416 from holding Procter Gamble or generate 8.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merit Medical Systems vs. Procter Gamble
Performance |
| Timeline |
| Merit Medical Systems |
| Procter Gamble |
Merit Medical and Procter Gamble Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merit Medical and Procter Gamble
The main advantage of trading using opposite Merit Medical and Procter Gamble positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merit Medical position performs unexpectedly, Procter Gamble 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 Procter Gamble will offset losses from the drop in Procter Gamble's long position.| Merit Medical vs. Profound Medical Corp | Merit Medical vs. Si Bone | Merit Medical vs. Nevro Corp | Merit Medical vs. Orthopediatrics Corp |
| Procter Gamble vs. Colgate Palmolive | Procter Gamble vs. Unilever PLC ADR | Procter Gamble vs. Kimberly Clark | Procter Gamble vs. Estee Lauder Companies |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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