Correlation Between Merit Medical and Postal Realty
Can any of the company-specific risk be diversified away by investing in both Merit Medical and Postal Realty 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 Postal Realty 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 Postal Realty Trust, you can compare the effects of market volatilities on Merit Medical and Postal Realty 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 Postal Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merit Medical and Postal Realty.
Diversification Opportunities for Merit Medical and Postal Realty
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Merit and Postal is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems and Postal Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Postal Realty Trust 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 Postal Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Postal Realty Trust has no effect on the direction of Merit Medical i.e., Merit Medical and Postal Realty go up and down completely randomly.
Pair Corralation between Merit Medical and Postal Realty
Given the investment horizon of 90 days Merit Medical Systems is expected to generate 1.13 times more return on investment than Postal Realty. However, Merit Medical is 1.13 times more volatile than Postal Realty Trust. It trades about 0.34 of its potential returns per unit of risk. Postal Realty Trust is currently generating about -0.12 per unit of risk. If you would invest 9,531 in Merit Medical Systems on August 27, 2024 and sell it today you would earn a total of 1,002 from holding Merit Medical Systems or generate 10.51% 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. Postal Realty Trust
Performance |
| Timeline |
| Merit Medical Systems |
| Postal Realty Trust |
Merit Medical and Postal Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merit Medical and Postal Realty
The main advantage of trading using opposite Merit Medical and Postal Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merit Medical position performs unexpectedly, Postal Realty 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 Postal Realty will offset losses from the drop in Postal Realty's long position.| Merit Medical vs. Heartbeam | Merit Medical vs. EUDA Health Holdings | Merit Medical vs. Nutex Health | Merit Medical vs. Healthcare Triangle |
| Postal Realty vs. Office Properties Income | Postal Realty vs. Boston Properties | Postal Realty vs. SL Green Realty | Postal Realty vs. Alexandria Real Estate |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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