Correlation Between Merck and CNH Industrial
Can any of the company-specific risk be diversified away by investing in both Merck and CNH Industrial 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 CNH Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and CNH Industrial NV, you can compare the effects of market volatilities on Merck and CNH Industrial 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 CNH Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and CNH Industrial.
Diversification Opportunities for Merck and CNH Industrial
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Merck and CNH is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and CNH Industrial NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNH Industrial NV 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 CNH Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNH Industrial NV has no effect on the direction of Merck i.e., Merck and CNH Industrial go up and down completely randomly.
Pair Corralation between Merck and CNH Industrial
If you would invest 998.00 in CNH Industrial NV on August 23, 2024 and sell it today you would earn a total of 69.00 from holding CNH Industrial NV or generate 6.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.78% |
| Values | Daily Returns |
Merck Company vs. CNH Industrial NV
Performance |
| Timeline |
| Merck Company |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| CNH Industrial NV |
Merck and CNH Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and CNH Industrial
The main advantage of trading using opposite Merck and CNH Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, CNH Industrial 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 CNH Industrial will offset losses from the drop in CNH Industrial's long position.| Merck vs. Vienna Insurance Group | Merck vs. Oberbank AG | Merck vs. Wiener Privatbank SE | Merck vs. CNH Industrial NV |
| CNH Industrial vs. Erste Group Bank | CNH Industrial vs. SBM Offshore NV | CNH Industrial vs. Vienna Insurance Group | CNH Industrial vs. UNIQA Insurance Group |
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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