Correlation Between Merit Medical and RDVA
Can any of the company-specific risk be diversified away by investing in both Merit Medical and RDVA 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 RDVA 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 RDVA Inc, you can compare the effects of market volatilities on Merit Medical and RDVA 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 RDVA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merit Medical and RDVA.
Diversification Opportunities for Merit Medical and RDVA
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Merit and RDVA is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems and RDVA Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RDVA Inc 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 RDVA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RDVA Inc has no effect on the direction of Merit Medical i.e., Merit Medical and RDVA go up and down completely randomly.
Pair Corralation between Merit Medical and RDVA
Given the investment horizon of 90 days Merit Medical is expected to generate 14.43 times less return on investment than RDVA. But when comparing it to its historical volatility, Merit Medical Systems is 18.5 times less risky than RDVA. It trades about 0.05 of its potential returns per unit of risk. RDVA Inc is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 0.57 in RDVA Inc on August 30, 2024 and sell it today you would lose (0.55) from holding RDVA Inc or give up 96.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merit Medical Systems vs. RDVA Inc
Performance |
| Timeline |
| Merit Medical Systems |
| RDVA Inc |
Merit Medical and RDVA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merit Medical and RDVA
The main advantage of trading using opposite Merit Medical and RDVA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merit Medical position performs unexpectedly, RDVA 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 RDVA will offset losses from the drop in RDVA's 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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