Correlation Between Merck and Bolloré SE
Can any of the company-specific risk be diversified away by investing in both Merck and Bolloré SE 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 Bolloré SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Bollor SE, you can compare the effects of market volatilities on Merck and Bolloré SE 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 Bolloré SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Bolloré SE.
Diversification Opportunities for Merck and Bolloré SE
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Merck and Bolloré is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Bollor SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bolloré SE 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 Bolloré SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bolloré SE has no effect on the direction of Merck i.e., Merck and Bolloré SE go up and down completely randomly.
Pair Corralation between Merck and Bolloré SE
Considering the 90-day investment horizon Merck Company is expected to generate 0.91 times more return on investment than Bolloré SE. However, Merck Company is 1.1 times less risky than Bolloré SE. It trades about -0.05 of its potential returns per unit of risk. Bollor SE is currently generating about -0.11 per unit of risk. If you would invest 10,483 in Merck Company on August 31, 2024 and sell it today you would lose (171.00) from holding Merck Company or give up 1.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merck Company vs. Bollor SE
Performance |
| Timeline |
| Merck Company |
| Bolloré SE |
Merck and Bolloré SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Bolloré SE
The main advantage of trading using opposite Merck and Bolloré SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Bolloré SE 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 Bolloré SE will offset losses from the drop in Bolloré SE's long position.The idea behind Merck Company and Bollor SE 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.| Bolloré SE vs. ZoomerMedia Limited | Bolloré SE vs. Network Media Group | Bolloré SE vs. New Wave 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
Other Complementary Tools
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios |