Correlation Between Merit Medical and Zoom Video
Can any of the company-specific risk be diversified away by investing in both Merit Medical and Zoom Video 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 Zoom Video 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 Zoom Video Communications, you can compare the effects of market volatilities on Merit Medical and Zoom Video 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 Zoom Video. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merit Medical and Zoom Video.
Diversification Opportunities for Merit Medical and Zoom Video
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Merit and Zoom is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems and Zoom Video Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zoom Video Communications 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 Zoom Video. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zoom Video Communications has no effect on the direction of Merit Medical i.e., Merit Medical and Zoom Video go up and down completely randomly.
Pair Corralation between Merit Medical and Zoom Video
Given the investment horizon of 90 days Merit Medical Systems is expected to generate 1.26 times more return on investment than Zoom Video. However, Merit Medical is 1.26 times more volatile than Zoom Video Communications. It trades about -0.07 of its potential returns per unit of risk. Zoom Video Communications is currently generating about -0.16 per unit of risk. If you would invest 9,711 in Merit Medical Systems on January 7, 2025 and sell it today you would lose (461.00) from holding Merit Medical Systems or give up 4.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merit Medical Systems vs. Zoom Video Communications
Performance |
| Timeline |
| Merit Medical Systems |
| Zoom Video Communications |
Merit Medical and Zoom Video Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merit Medical and Zoom Video
The main advantage of trading using opposite Merit Medical and Zoom Video positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merit Medical position performs unexpectedly, Zoom Video 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 Zoom Video will offset losses from the drop in Zoom Video'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 |
| Zoom Video vs. Agilysys | Zoom Video vs. ADEIA P | Zoom Video vs. Paycor HCM | Zoom Video vs. Paylocity Holdng |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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