Correlation Between Merck and Ayurcann Holdings
Can any of the company-specific risk be diversified away by investing in both Merck and Ayurcann Holdings 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 Ayurcann Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Ayurcann Holdings Corp, you can compare the effects of market volatilities on Merck and Ayurcann Holdings 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 Ayurcann Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Ayurcann Holdings.
Diversification Opportunities for Merck and Ayurcann Holdings
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Merck and Ayurcann is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Ayurcann Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ayurcann Holdings Corp 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 Ayurcann Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ayurcann Holdings Corp has no effect on the direction of Merck i.e., Merck and Ayurcann Holdings go up and down completely randomly.
Pair Corralation between Merck and Ayurcann Holdings
Considering the 90-day investment horizon Merck Company is expected to under-perform the Ayurcann Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Merck Company is 11.75 times less risky than Ayurcann Holdings. The stock trades about -0.01 of its potential returns per unit of risk. The Ayurcann Holdings Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 3.80 in Ayurcann Holdings Corp on November 27, 2024 and sell it today you would lose (1.72) from holding Ayurcann Holdings Corp or give up 45.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.0% |
| Values | Daily Returns |
Merck Company vs. Ayurcann Holdings Corp
Performance |
| Timeline |
| Merck Company |
| Ayurcann Holdings Corp |
Merck and Ayurcann Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Ayurcann Holdings
The main advantage of trading using opposite Merck and Ayurcann Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Ayurcann Holdings 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 Ayurcann Holdings will offset losses from the drop in Ayurcann Holdings' long position.The idea behind Merck Company and Ayurcann Holdings Corp 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.| Ayurcann Holdings vs. Ionic Brands Corp | Ayurcann Holdings vs. Lowell Farms | Ayurcann Holdings vs. Vext Science | Ayurcann Holdings vs. Grown Rogue International |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |