Correlation Between Merck and Artivion
Can any of the company-specific risk be diversified away by investing in both Merck and Artivion 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 Artivion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Artivion, you can compare the effects of market volatilities on Merck and Artivion 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 Artivion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Artivion.
Diversification Opportunities for Merck and Artivion
Excellent diversification
The 3 months correlation between Merck and Artivion is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Artivion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Artivion 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 Artivion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Artivion has no effect on the direction of Merck i.e., Merck and Artivion go up and down completely randomly.
Pair Corralation between Merck and Artivion
Considering the 90-day investment horizon Merck Company is expected to under-perform the Artivion. But the stock apears to be less risky and, when comparing its historical volatility, Merck Company is 1.95 times less risky than Artivion. The stock trades about 0.0 of its potential returns per unit of risk. The Artivion is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,549 in Artivion on August 31, 2024 and sell it today you would earn a total of 1,403 from holding Artivion or generate 90.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merck Company vs. Artivion
Performance |
| Timeline |
| Merck Company |
| Artivion |
Merck and Artivion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Artivion
The main advantage of trading using opposite Merck and Artivion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Artivion 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 Artivion will offset losses from the drop in Artivion's long position.The idea behind Merck Company and Artivion pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Artivion vs. Abbott Laboratories | Artivion vs. Medtronic PLC | Artivion vs. Edwards Lifesciences Corp | Artivion vs. ZimVie Inc |
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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