Correlation Between Merit Medical and Teleflex Incorporated
Can any of the company-specific risk be diversified away by investing in both Merit Medical and Teleflex Incorporated 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 Teleflex Incorporated 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 Teleflex Incorporated, you can compare the effects of market volatilities on Merit Medical and Teleflex Incorporated 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 Teleflex Incorporated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merit Medical and Teleflex Incorporated.
Diversification Opportunities for Merit Medical and Teleflex Incorporated
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Merit and Teleflex is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems and Teleflex Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teleflex Incorporated 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 Teleflex Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teleflex Incorporated has no effect on the direction of Merit Medical i.e., Merit Medical and Teleflex Incorporated go up and down completely randomly.
Pair Corralation between Merit Medical and Teleflex Incorporated
Given the investment horizon of 90 days Merit Medical Systems is expected to generate 1.2 times more return on investment than Teleflex Incorporated. However, Merit Medical is 1.2 times more volatile than Teleflex Incorporated. It trades about 0.45 of its potential returns per unit of risk. Teleflex Incorporated is currently generating about 0.11 per unit of risk. If you would invest 9,672 in Merit Medical Systems on November 1, 2024 and sell it today you would earn a total of 1,357 from holding Merit Medical Systems or generate 14.03% 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. Teleflex Incorporated
Performance |
| Timeline |
| Merit Medical Systems |
| Teleflex Incorporated |
Merit Medical and Teleflex Incorporated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merit Medical and Teleflex Incorporated
The main advantage of trading using opposite Merit Medical and Teleflex Incorporated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merit Medical position performs unexpectedly, Teleflex Incorporated 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 Teleflex Incorporated will offset losses from the drop in Teleflex Incorporated'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 |
| Teleflex Incorporated vs. West Pharmaceutical Services | Teleflex Incorporated vs. Alcon AG | Teleflex Incorporated vs. ResMed Inc | Teleflex Incorporated vs. ICU Medical |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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