Correlation Between Merit Medical and Victory Energy
Can any of the company-specific risk be diversified away by investing in both Merit Medical and Victory Energy 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 Victory Energy 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 Victory Energy Corp, you can compare the effects of market volatilities on Merit Medical and Victory Energy 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 Victory Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merit Medical and Victory Energy.
Diversification Opportunities for Merit Medical and Victory Energy
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Merit and Victory is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems and Victory Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victory Energy Corp 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 Victory Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victory Energy Corp has no effect on the direction of Merit Medical i.e., Merit Medical and Victory Energy go up and down completely randomly.
Pair Corralation between Merit Medical and Victory Energy
Given the investment horizon of 90 days Merit Medical is expected to generate 154.63 times less return on investment than Victory Energy. But when comparing it to its historical volatility, Merit Medical Systems is 119.36 times less risky than Victory Energy. It trades about 0.11 of its potential returns per unit of risk. Victory Energy Corp is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 55.00 in Victory Energy Corp on August 29, 2024 and sell it today you would lose (25.00) from holding Victory Energy Corp or give up 45.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 96.88% |
| Values | Daily Returns |
Merit Medical Systems vs. Victory Energy Corp
Performance |
| Timeline |
| Merit Medical Systems |
| Victory Energy Corp |
Merit Medical and Victory Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merit Medical and Victory Energy
The main advantage of trading using opposite Merit Medical and Victory Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merit Medical position performs unexpectedly, Victory Energy 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 Victory Energy will offset losses from the drop in Victory Energy's long position.| Merit Medical vs. Femasys | Merit Medical vs. Sharps Technology Warrant | Merit Medical vs. Teleflex Incorporated | Merit Medical vs. GlucoTrack |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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