Correlation Between Merit Medical and Vestis
Can any of the company-specific risk be diversified away by investing in both Merit Medical and Vestis 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 Vestis 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 Vestis, you can compare the effects of market volatilities on Merit Medical and Vestis 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 Vestis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merit Medical and Vestis.
Diversification Opportunities for Merit Medical and Vestis
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Merit and Vestis is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems and Vestis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vestis 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 Vestis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vestis has no effect on the direction of Merit Medical i.e., Merit Medical and Vestis go up and down completely randomly.
Pair Corralation between Merit Medical and Vestis
Given the investment horizon of 90 days Merit Medical is expected to generate 1.43 times less return on investment than Vestis. But when comparing it to its historical volatility, Merit Medical Systems is 2.59 times less risky than Vestis. It trades about 0.17 of its potential returns per unit of risk. Vestis is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,497 in Vestis on September 12, 2024 and sell it today you would earn a total of 165.00 from holding Vestis or generate 11.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merit Medical Systems vs. Vestis
Performance |
| Timeline |
| Merit Medical Systems |
| Vestis |
Merit Medical and Vestis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merit Medical and Vestis
The main advantage of trading using opposite Merit Medical and Vestis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merit Medical position performs unexpectedly, Vestis 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 Vestis will offset losses from the drop in Vestis' long position.| Merit Medical vs. Teleflex Incorporated | Merit Medical vs. The Cooper Companies, | Merit Medical vs. West Pharmaceutical Services | Merit Medical vs. ICU Medical |
| Vestis vs. Ryder System | Vestis vs. Air Lease | Vestis vs. Willis Lease Finance | Vestis vs. AerCap Holdings NV |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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