Correlation Between Merck and Wiener Privatbank
Can any of the company-specific risk be diversified away by investing in both Merck and Wiener Privatbank 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 Wiener Privatbank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Wiener Privatbank SE, you can compare the effects of market volatilities on Merck and Wiener Privatbank 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 Wiener Privatbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Wiener Privatbank.
Diversification Opportunities for Merck and Wiener Privatbank
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Merck and Wiener is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Wiener Privatbank SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wiener Privatbank 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 Wiener Privatbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wiener Privatbank has no effect on the direction of Merck i.e., Merck and Wiener Privatbank go up and down completely randomly.
Pair Corralation between Merck and Wiener Privatbank
Assuming the 90 days trading horizon Merck is expected to generate 23.27 times less return on investment than Wiener Privatbank. In addition to that, Merck is 1.07 times more volatile than Wiener Privatbank SE. It trades about 0.02 of its total potential returns per unit of risk. Wiener Privatbank SE is currently generating about 0.42 per unit of volatility. If you would invest 680.00 in Wiener Privatbank SE on December 6, 2024 and sell it today you would earn a total of 120.00 from holding Wiener Privatbank SE or generate 17.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Merck Company vs. Wiener Privatbank SE
Performance |
| Timeline |
| Merck Company |
| Wiener Privatbank |
Merck and Wiener Privatbank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Wiener Privatbank
The main advantage of trading using opposite Merck and Wiener Privatbank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Wiener Privatbank 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 Wiener Privatbank will offset losses from the drop in Wiener Privatbank's long position.| Merck vs. Oberbank AG | Merck vs. Raiffeisen Bank International | Merck vs. UNIQA Insurance Group | Merck vs. AMAG Austria Metall |
| Wiener Privatbank vs. AMAG Austria Metall | Wiener Privatbank vs. Vienna Insurance Group | Wiener Privatbank vs. Raiffeisen Bank International | Wiener Privatbank vs. Oberbank AG |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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