Correlation Between Merck and Progressive Planet
Can any of the company-specific risk be diversified away by investing in both Merck and Progressive Planet 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 Progressive Planet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Progressive Planet Solutions, you can compare the effects of market volatilities on Merck and Progressive Planet 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 Progressive Planet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Progressive Planet.
Diversification Opportunities for Merck and Progressive Planet
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Merck and Progressive is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Progressive Planet Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Progressive Planet 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 Progressive Planet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Progressive Planet has no effect on the direction of Merck i.e., Merck and Progressive Planet go up and down completely randomly.
Pair Corralation between Merck and Progressive Planet
Considering the 90-day investment horizon Merck Company is expected to under-perform the Progressive Planet. But the stock apears to be less risky and, when comparing its historical volatility, Merck Company is 4.97 times less risky than Progressive Planet. The stock trades about -0.12 of its potential returns per unit of risk. The Progressive Planet Solutions is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 7.60 in Progressive Planet Solutions on September 3, 2024 and sell it today you would earn a total of 5.40 from holding Progressive Planet Solutions or generate 71.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merck Company vs. Progressive Planet Solutions
Performance |
| Timeline |
| Merck Company |
| Progressive Planet |
Merck and Progressive Planet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Progressive Planet
The main advantage of trading using opposite Merck and Progressive Planet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Progressive Planet 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 Progressive Planet will offset losses from the drop in Progressive Planet's long position.| Merck vs. Pfizer Inc | Merck vs. Johnson Johnson | Merck vs. Highway Holdings Limited | Merck vs. QCR Holdings |
| Progressive Planet vs. Qubec Nickel Corp | Progressive Planet vs. IGO Limited | Progressive Planet vs. Avarone Metals | Progressive Planet vs. Adriatic Metals PLC |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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