Correlation Between Merck and IPath Bloomberg
Can any of the company-specific risk be diversified away by investing in both Merck and IPath Bloomberg 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 IPath Bloomberg into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and IPath Bloomberg Cotton, you can compare the effects of market volatilities on Merck and IPath Bloomberg 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 IPath Bloomberg. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and IPath Bloomberg.
Diversification Opportunities for Merck and IPath Bloomberg
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Merck and IPath is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and IPath Bloomberg Cotton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IPath Bloomberg Cotton 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 IPath Bloomberg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IPath Bloomberg Cotton has no effect on the direction of Merck i.e., Merck and IPath Bloomberg go up and down completely randomly.
Pair Corralation between Merck and IPath Bloomberg
Considering the 90-day investment horizon Merck Company is expected to under-perform the IPath Bloomberg. In addition to that, Merck is 2.24 times more volatile than IPath Bloomberg Cotton. It trades about 0.0 of its total potential returns per unit of risk. IPath Bloomberg Cotton is currently generating about 0.05 per unit of volatility. If you would invest 5,681 in IPath Bloomberg Cotton on September 4, 2024 and sell it today you would earn a total of 237.00 from holding IPath Bloomberg Cotton or generate 4.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 30.51% |
| Values | Daily Returns |
Merck Company vs. IPath Bloomberg Cotton
Performance |
| Timeline |
| Merck Company |
| IPath Bloomberg Cotton |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Merck and IPath Bloomberg Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and IPath Bloomberg
The main advantage of trading using opposite Merck and IPath Bloomberg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, IPath Bloomberg 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 IPath Bloomberg will offset losses from the drop in IPath Bloomberg's long position.| Merck vs. Crinetics Pharmaceuticals | Merck vs. Enanta Pharmaceuticals | Merck vs. Amicus Therapeutics | Merck vs. Connect Biopharma Holdings |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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