Correlation Between Merck and PUBLIC STORAGE
Can any of the company-specific risk be diversified away by investing in both Merck and PUBLIC STORAGE 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 Merck and PUBLIC STORAGE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and PUBLIC STORAGE PRFO, you can compare the effects of market volatilities on Merck and PUBLIC STORAGE 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 Merck with a short position of PUBLIC STORAGE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and PUBLIC STORAGE.
Diversification Opportunities for Merck and PUBLIC STORAGE
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Merck and PUBLIC is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and PUBLIC STORAGE PRFO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PUBLIC STORAGE PRFO and Merck 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 Merck Company are associated (or correlated) with PUBLIC STORAGE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PUBLIC STORAGE PRFO has no effect on the direction of Merck i.e., Merck and PUBLIC STORAGE go up and down completely randomly.
Pair Corralation between Merck and PUBLIC STORAGE
Assuming the 90 days trading horizon Merck Company is expected to under-perform the PUBLIC STORAGE. In addition to that, Merck is 1.37 times more volatile than PUBLIC STORAGE PRFO. It trades about -0.15 of its total potential returns per unit of risk. PUBLIC STORAGE PRFO is currently generating about -0.15 per unit of volatility. If you would invest 1,680 in PUBLIC STORAGE PRFO on September 13, 2024 and sell it today you would lose (50.00) from holding PUBLIC STORAGE PRFO or give up 2.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Merck Company vs. PUBLIC STORAGE PRFO
Performance |
| Timeline |
| Merck Company |
| PUBLIC STORAGE PRFO |
Merck and PUBLIC STORAGE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and PUBLIC STORAGE
The main advantage of trading using opposite Merck and PUBLIC STORAGE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, PUBLIC STORAGE 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 PUBLIC STORAGE will offset losses from the drop in PUBLIC STORAGE's long position.| Merck vs. Salesforce | Merck vs. CarsalesCom | Merck vs. PACIFIC ONLINE | Merck vs. GungHo Online Entertainment |
| PUBLIC STORAGE vs. Xtrackers LevDAX | PUBLIC STORAGE vs. Xtrackers ShortDAX | PUBLIC STORAGE vs. Lyxor 1 | PUBLIC STORAGE vs. SIVERS SEMICONDUCTORS AB |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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