Correlation Between Merck and Beyond Minerals
Can any of the company-specific risk be diversified away by investing in both Merck and Beyond Minerals 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 Beyond Minerals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Beyond Minerals, you can compare the effects of market volatilities on Merck and Beyond Minerals 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 Beyond Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Beyond Minerals.
Diversification Opportunities for Merck and Beyond Minerals
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Merck and Beyond is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Beyond Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beyond Minerals 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 Beyond Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beyond Minerals has no effect on the direction of Merck i.e., Merck and Beyond Minerals go up and down completely randomly.
Pair Corralation between Merck and Beyond Minerals
Considering the 90-day investment horizon Merck Company is expected to under-perform the Beyond Minerals. But the stock apears to be less risky and, when comparing its historical volatility, Merck Company is 14.79 times less risky than Beyond Minerals. The stock trades about -0.09 of its potential returns per unit of risk. The Beyond Minerals is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 10.00 in Beyond Minerals on September 3, 2024 and sell it today you would lose (7.23) from holding Beyond Minerals or give up 72.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merck Company vs. Beyond Minerals
Performance |
| Timeline |
| Merck Company |
| Beyond Minerals |
Merck and Beyond Minerals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Beyond Minerals
The main advantage of trading using opposite Merck and Beyond Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Beyond Minerals 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 Beyond Minerals will offset losses from the drop in Beyond Minerals' long position.| Merck vs. Pfizer Inc | Merck vs. Johnson Johnson | Merck vs. Highway Holdings Limited | Merck vs. QCR Holdings |
| Beyond Minerals vs. Winsome Resources Limited | Beyond Minerals vs. IGO Limited | Beyond Minerals vs. Qubec Nickel Corp | Beyond Minerals vs. IGO Limited |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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