Correlation Between Merck and STKD Bitcoin
Can any of the company-specific risk be diversified away by investing in both Merck and STKD Bitcoin 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 STKD Bitcoin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and STKD Bitcoin Gold, you can compare the effects of market volatilities on Merck and STKD Bitcoin 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 STKD Bitcoin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and STKD Bitcoin.
Diversification Opportunities for Merck and STKD Bitcoin
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Merck and STKD is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and STKD Bitcoin Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STKD Bitcoin Gold 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 STKD Bitcoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STKD Bitcoin Gold has no effect on the direction of Merck i.e., Merck and STKD Bitcoin go up and down completely randomly.
Pair Corralation between Merck and STKD Bitcoin
Considering the 90-day investment horizon Merck Company is expected to under-perform the STKD Bitcoin. But the stock apears to be less risky and, when comparing its historical volatility, Merck Company is 2.35 times less risky than STKD Bitcoin. The stock trades about -0.01 of its potential returns per unit of risk. The STKD Bitcoin Gold is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 2,785 in STKD Bitcoin Gold on November 3, 2024 and sell it today you would earn a total of 238.00 from holding STKD Bitcoin Gold or generate 8.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merck Company vs. STKD Bitcoin Gold
Performance |
| Timeline |
| Merck Company |
| STKD Bitcoin Gold |
Merck and STKD Bitcoin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and STKD Bitcoin
The main advantage of trading using opposite Merck and STKD Bitcoin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, STKD Bitcoin 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 STKD Bitcoin will offset losses from the drop in STKD Bitcoin's long position.The idea behind Merck Company and STKD Bitcoin Gold 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.| STKD Bitcoin vs. First Trust Multi Asset | STKD Bitcoin vs. Collaborative Investment Series | STKD Bitcoin vs. Northern Lights | STKD Bitcoin vs. Ocean Park International |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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