Correlation Between Merck and Aurion Resources
Can any of the company-specific risk be diversified away by investing in both Merck and Aurion Resources 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 Aurion Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Aurion Resources, you can compare the effects of market volatilities on Merck and Aurion Resources 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 Aurion Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Aurion Resources.
Diversification Opportunities for Merck and Aurion Resources
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Merck and Aurion is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Aurion Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurion Resources 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 Aurion Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurion Resources has no effect on the direction of Merck i.e., Merck and Aurion Resources go up and down completely randomly.
Pair Corralation between Merck and Aurion Resources
Considering the 90-day investment horizon Merck is expected to generate 32.29 times less return on investment than Aurion Resources. But when comparing it to its historical volatility, Merck Company is 3.36 times less risky than Aurion Resources. It trades about 0.0 of its potential returns per unit of risk. Aurion Resources is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 42.00 in Aurion Resources on August 28, 2024 and sell it today you would lose (2.00) from holding Aurion Resources or give up 4.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merck Company vs. Aurion Resources
Performance |
| Timeline |
| Merck Company |
| Aurion Resources |
Merck and Aurion Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Aurion Resources
The main advantage of trading using opposite Merck and Aurion Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Aurion Resources 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 Aurion Resources will offset losses from the drop in Aurion Resources' long position.| Merck vs. Capricor Therapeutics | Merck vs. Soleno Therapeutics | Merck vs. Bio Path Holdings | Merck vs. Moleculin Biotech |
| Aurion Resources vs. Minnova Corp | Aurion Resources vs. Argo Gold | Aurion Resources vs. Advance Gold Corp | Aurion Resources vs. Blue Star Gold |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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