Correlation Between Merck and Calamos Hedged
Can any of the company-specific risk be diversified away by investing in both Merck and Calamos Hedged 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 Calamos Hedged into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Calamos Hedged Equity, you can compare the effects of market volatilities on Merck and Calamos Hedged 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 Calamos Hedged. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Calamos Hedged.
Diversification Opportunities for Merck and Calamos Hedged
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Merck and Calamos is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Calamos Hedged Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calamos Hedged Equity 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 Calamos Hedged. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calamos Hedged Equity has no effect on the direction of Merck i.e., Merck and Calamos Hedged go up and down completely randomly.
Pair Corralation between Merck and Calamos Hedged
Considering the 90-day investment horizon Merck Company is expected to under-perform the Calamos Hedged. In addition to that, Merck is 3.09 times more volatile than Calamos Hedged Equity. It trades about -0.02 of its total potential returns per unit of risk. Calamos Hedged Equity is currently generating about 0.32 per unit of volatility. If you would invest 1,700 in Calamos Hedged Equity on September 1, 2024 and sell it today you would earn a total of 50.00 from holding Calamos Hedged Equity or generate 2.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Merck Company vs. Calamos Hedged Equity
Performance |
| Timeline |
| Merck Company |
| Calamos Hedged Equity |
Merck and Calamos Hedged Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Calamos Hedged
The main advantage of trading using opposite Merck and Calamos Hedged positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Calamos Hedged 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 Calamos Hedged will offset losses from the drop in Calamos Hedged's long position.The idea behind Merck Company and Calamos Hedged Equity 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges |