Correlation Between Merck and Banner Acquisition
Can any of the company-specific risk be diversified away by investing in both Merck and Banner 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 Banner 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 Banner Acquisition Corp, you can compare the effects of market volatilities on Merck and Banner 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 Banner Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Banner Acquisition.
Diversification Opportunities for Merck and Banner Acquisition
-0.91 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Merck and Banner is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Banner Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banner Acquisition 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 Banner Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banner Acquisition Corp has no effect on the direction of Merck i.e., Merck and Banner Acquisition go up and down completely randomly.
Pair Corralation between Merck and Banner Acquisition
If you would invest 1,029 in Banner Acquisition Corp on September 1, 2024 and sell it today you would earn a total of 0.00 from holding Banner Acquisition Corp or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 4.76% |
| Values | Daily Returns |
Merck Company vs. Banner Acquisition Corp
Performance |
| Timeline |
| Merck Company |
| Banner Acquisition Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Merck and Banner Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Banner Acquisition
The main advantage of trading using opposite Merck and Banner Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Banner 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 Banner Acquisition will offset losses from the drop in Banner Acquisition's long position.The idea behind Merck Company and Banner Acquisition 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.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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
Other Complementary Tools
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device |