Correlation Between Merck and Bluestone Resources
Can any of the company-specific risk be diversified away by investing in both Merck and Bluestone Resources 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 Bluestone Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Bluestone Resources, you can compare the effects of market volatilities on Merck and Bluestone Resources 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 Bluestone Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Bluestone Resources.
Diversification Opportunities for Merck and Bluestone Resources
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Merck and Bluestone is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Bluestone Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bluestone Resources 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 Bluestone Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bluestone Resources has no effect on the direction of Merck i.e., Merck and Bluestone Resources go up and down completely randomly.
Pair Corralation between Merck and Bluestone Resources
Considering the 90-day investment horizon Merck Company is expected to under-perform the Bluestone Resources. But the stock apears to be less risky and, when comparing its historical volatility, Merck Company is 5.02 times less risky than Bluestone Resources. The stock trades about -0.12 of its potential returns per unit of risk. The Bluestone Resources is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 36.00 in Bluestone Resources on September 3, 2024 and sell it today you would lose (14.00) from holding Bluestone Resources or give up 38.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merck Company vs. Bluestone Resources
Performance |
| Timeline |
| Merck Company |
| Bluestone Resources |
Merck and Bluestone Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Bluestone Resources
The main advantage of trading using opposite Merck and Bluestone Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Bluestone Resources 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 Bluestone Resources will offset losses from the drop in Bluestone Resources' long position.| Merck vs. Pfizer Inc | Merck vs. Johnson Johnson | Merck vs. Highway Holdings Limited | Merck vs. QCR Holdings |
| Bluestone Resources vs. Minnova Corp | Bluestone Resources vs. Argo Gold | Bluestone Resources vs. Advance Gold Corp | Bluestone Resources vs. Blue Star Gold |
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 Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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