Correlation Between Merit Medical and Boston Beer
Can any of the company-specific risk be diversified away by investing in both Merit Medical and Boston Beer 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 Boston Beer 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 Boston Beer, you can compare the effects of market volatilities on Merit Medical and Boston Beer 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 Boston Beer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merit Medical and Boston Beer.
Diversification Opportunities for Merit Medical and Boston Beer
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Merit and Boston is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems and Boston Beer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Beer 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 Boston Beer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boston Beer has no effect on the direction of Merit Medical i.e., Merit Medical and Boston Beer go up and down completely randomly.
Pair Corralation between Merit Medical and Boston Beer
Given the investment horizon of 90 days Merit Medical Systems is expected to generate 0.71 times more return on investment than Boston Beer. However, Merit Medical Systems is 1.4 times less risky than Boston Beer. It trades about 0.06 of its potential returns per unit of risk. Boston Beer is currently generating about -0.02 per unit of risk. If you would invest 7,086 in Merit Medical Systems on November 2, 2024 and sell it today you would earn a total of 3,910 from holding Merit Medical Systems or generate 55.18% 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. Boston Beer
Performance |
| Timeline |
| Merit Medical Systems |
| Boston Beer |
Merit Medical and Boston Beer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merit Medical and Boston Beer
The main advantage of trading using opposite Merit Medical and Boston Beer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merit Medical position performs unexpectedly, Boston Beer 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 Boston Beer will offset losses from the drop in Boston Beer's long position.| Merit Medical vs. Teleflex Incorporated | Merit Medical vs. The Cooper Companies, | Merit Medical vs. West Pharmaceutical Services | Merit Medical vs. ICU Medical |
| Boston Beer vs. Anheuser Busch Inbev | Boston Beer vs. Molson Coors Beverage | Boston Beer vs. Heineken NV | Boston Beer vs. Ambev SA ADR |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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