Correlation Between Merck and Innovator Etfs
Can any of the company-specific risk be diversified away by investing in both Merck and Innovator Etfs 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 Innovator Etfs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Innovator Etfs Trust, you can compare the effects of market volatilities on Merck and Innovator Etfs 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 Innovator Etfs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Innovator Etfs.
Diversification Opportunities for Merck and Innovator Etfs
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Merck and Innovator is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Innovator Etfs Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator Etfs Trust 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 Innovator Etfs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator Etfs Trust has no effect on the direction of Merck i.e., Merck and Innovator Etfs go up and down completely randomly.
Pair Corralation between Merck and Innovator Etfs
Considering the 90-day investment horizon Merck Company is expected to under-perform the Innovator Etfs. In addition to that, Merck is 12.91 times more volatile than Innovator Etfs Trust. It trades about -0.03 of its total potential returns per unit of risk. Innovator Etfs Trust is currently generating about 0.19 per unit of volatility. If you would invest 2,474 in Innovator Etfs Trust on November 5, 2024 and sell it today you would earn a total of 9.00 from holding Innovator Etfs Trust or generate 0.36% 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. Innovator Etfs Trust
Performance |
| Timeline |
| Merck Company |
| Innovator Etfs Trust |
Merck and Innovator Etfs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Innovator Etfs
The main advantage of trading using opposite Merck and Innovator Etfs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Innovator Etfs 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 Innovator Etfs will offset losses from the drop in Innovator Etfs' long position.The idea behind Merck Company and Innovator Etfs Trust 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.| Innovator Etfs vs. Innovator Premium Income | Innovator Etfs vs. Innovator Premium Income | Innovator Etfs vs. Innovator Premium Income |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
Other Complementary Tools
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Global Correlations Find global opportunities by holding instruments from different markets |