Correlation Between Merck and Northern Institutional
Can any of the company-specific risk be diversified away by investing in both Merck and Northern Institutional 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 Northern Institutional into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Northern Institutional Funds, you can compare the effects of market volatilities on Merck and Northern Institutional 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 Northern Institutional. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Northern Institutional.
Diversification Opportunities for Merck and Northern Institutional
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Merck and Northern is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Northern Institutional Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Institutional 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 Northern Institutional. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Institutional has no effect on the direction of Merck i.e., Merck and Northern Institutional go up and down completely randomly.
Pair Corralation between Merck and Northern Institutional
If you would invest 100.00 in Northern Institutional Funds on August 30, 2024 and sell it today you would earn a total of 0.00 from holding Northern Institutional Funds or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Merck Company vs. Northern Institutional Funds
Performance |
| Timeline |
| Merck Company |
| Northern Institutional |
Merck and Northern Institutional Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Northern Institutional
The main advantage of trading using opposite Merck and Northern Institutional positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Northern Institutional 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 Northern Institutional will offset losses from the drop in Northern Institutional's long position.| Merck vs. Emergent Biosolutions | Merck vs. Bausch Health Companies | Merck vs. Neurocrine Biosciences | Merck vs. Teva Pharma Industries |
| Northern Institutional vs. Omni Small Cap Value | Northern Institutional vs. Qs Growth Fund | Northern Institutional vs. Nasdaq 100 Index Fund | Northern Institutional vs. Ab Value Fund |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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