Correlation Between Merit Medical and Dentsply Sirona
Can any of the company-specific risk be diversified away by investing in both Merit Medical and Dentsply Sirona 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 Dentsply Sirona 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 Dentsply Sirona, you can compare the effects of market volatilities on Merit Medical and Dentsply Sirona 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 Dentsply Sirona. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merit Medical and Dentsply Sirona.
Diversification Opportunities for Merit Medical and Dentsply Sirona
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Merit and Dentsply is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems and Dentsply Sirona in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dentsply Sirona 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 Dentsply Sirona. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dentsply Sirona has no effect on the direction of Merit Medical i.e., Merit Medical and Dentsply Sirona go up and down completely randomly.
Pair Corralation between Merit Medical and Dentsply Sirona
Given the investment horizon of 90 days Merit Medical Systems is expected to generate 0.82 times more return on investment than Dentsply Sirona. However, Merit Medical Systems is 1.22 times less risky than Dentsply Sirona. It trades about 0.24 of its potential returns per unit of risk. Dentsply Sirona is currently generating about 0.08 per unit of risk. If you would invest 9,627 in Merit Medical Systems on October 20, 2024 and sell it today you would earn a total of 663.00 from holding Merit Medical Systems or generate 6.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merit Medical Systems vs. Dentsply Sirona
Performance |
| Timeline |
| Merit Medical Systems |
| Dentsply Sirona |
Merit Medical and Dentsply Sirona Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merit Medical and Dentsply Sirona
The main advantage of trading using opposite Merit Medical and Dentsply Sirona positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merit Medical position performs unexpectedly, Dentsply Sirona 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 Dentsply Sirona will offset losses from the drop in Dentsply Sirona'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 |
| Dentsply Sirona vs. Merit Medical Systems | Dentsply Sirona vs. ICU Medical | Dentsply Sirona vs. The Cooper Companies, | Dentsply Sirona vs. AngioDynamics |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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