Correlation Between Merck and Minnova Corp
Can any of the company-specific risk be diversified away by investing in both Merck and Minnova Corp 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 Minnova Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Minnova Corp, you can compare the effects of market volatilities on Merck and Minnova Corp 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 Minnova Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Minnova Corp.
Diversification Opportunities for Merck and Minnova Corp
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Merck and Minnova is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Minnova Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Minnova Corp 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 Minnova Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Minnova Corp has no effect on the direction of Merck i.e., Merck and Minnova Corp go up and down completely randomly.
Pair Corralation between Merck and Minnova Corp
Considering the 90-day investment horizon Merck Company is expected to generate 0.12 times more return on investment than Minnova Corp. However, Merck Company is 8.04 times less risky than Minnova Corp. It trades about -0.09 of its potential returns per unit of risk. Minnova Corp is currently generating about -0.13 per unit of risk. If you would invest 12,396 in Merck Company on August 29, 2024 and sell it today you would lose (2,084) from holding Merck Company or give up 16.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merck Company vs. Minnova Corp
Performance |
| Timeline |
| Merck Company |
| Minnova Corp |
Merck and Minnova Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Minnova Corp
The main advantage of trading using opposite Merck and Minnova Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Minnova Corp 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 Minnova Corp will offset losses from the drop in Minnova Corp's long position.| Merck vs. Pharvaris BV | Merck vs. Brinker International | Merck vs. Alcoa Corp | Merck vs. Direxion Daily FTSE |
| Minnova Corp vs. Blue Star Gold | Minnova Corp vs. Advance Gold Corp | Minnova Corp vs. Angkor Resources Corp | Minnova Corp vs. Advance United Holdings |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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