Correlation Between Merck and Blueriver Acquisition
Can any of the company-specific risk be diversified away by investing in both Merck and Blueriver Acquisition 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 Blueriver Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Blueriver Acquisition Corp, you can compare the effects of market volatilities on Merck and Blueriver Acquisition 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 Blueriver Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Blueriver Acquisition.
Diversification Opportunities for Merck and Blueriver Acquisition
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Merck and Blueriver is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Blueriver Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blueriver Acquisition 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 Blueriver Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blueriver Acquisition has no effect on the direction of Merck i.e., Merck and Blueriver Acquisition go up and down completely randomly.
Pair Corralation between Merck and Blueriver Acquisition
Considering the 90-day investment horizon Merck Company is expected to generate 4.07 times more return on investment than Blueriver Acquisition. However, Merck is 4.07 times more volatile than Blueriver Acquisition Corp. It trades about 0.01 of its potential returns per unit of risk. Blueriver Acquisition Corp is currently generating about -0.01 per unit of risk. If you would invest 10,107 in Merck Company on September 3, 2024 and sell it today you would lose (46.00) from holding Merck Company or give up 0.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 80.97% |
| Values | Daily Returns |
Merck Company vs. Blueriver Acquisition Corp
Performance |
| Timeline |
| Merck Company |
| Blueriver Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Merck and Blueriver Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Blueriver Acquisition
The main advantage of trading using opposite Merck and Blueriver Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Blueriver Acquisition 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 Blueriver Acquisition will offset losses from the drop in Blueriver Acquisition's long position.| Merck vs. Pfizer Inc | Merck vs. Johnson Johnson | Merck vs. Highway Holdings Limited | Merck vs. QCR 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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