Correlation Between Merck and Tidal Trust
Can any of the company-specific risk be diversified away by investing in both Merck and Tidal Trust 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 Tidal Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Tidal Trust II, you can compare the effects of market volatilities on Merck and Tidal Trust 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 Tidal Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Tidal Trust.
Diversification Opportunities for Merck and Tidal Trust
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Merck and Tidal is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Tidal Trust II in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tidal Trust II 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 Tidal Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tidal Trust II has no effect on the direction of Merck i.e., Merck and Tidal Trust go up and down completely randomly.
Pair Corralation between Merck and Tidal Trust
Considering the 90-day investment horizon Merck Company is expected to under-perform the Tidal Trust. In addition to that, Merck is 1.92 times more volatile than Tidal Trust II. It trades about -0.02 of its total potential returns per unit of risk. Tidal Trust II is currently generating about 0.38 per unit of volatility. If you would invest 1,698 in Tidal Trust II on September 1, 2024 and sell it today you would earn a total of 92.00 from holding Tidal Trust II or generate 5.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merck Company vs. Tidal Trust II
Performance |
| Timeline |
| Merck Company |
| Tidal Trust II |
Merck and Tidal Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Tidal Trust
The main advantage of trading using opposite Merck and Tidal Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Tidal Trust 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 Tidal Trust will offset losses from the drop in Tidal Trust's long position.The idea behind Merck Company and Tidal Trust II 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.| Tidal Trust vs. Global X SP | Tidal Trust vs. Amplify CWP Enhanced | Tidal Trust vs. JPMorgan Equity Premium |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Bonds Directory Find actively traded corporate debentures issued by US companies |