Correlation Between Merck and CCFNB Bancorp
Can any of the company-specific risk be diversified away by investing in both Merck and CCFNB Bancorp 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 CCFNB Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and CCFNB Bancorp, you can compare the effects of market volatilities on Merck and CCFNB Bancorp 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 CCFNB Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and CCFNB Bancorp.
Diversification Opportunities for Merck and CCFNB Bancorp
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Merck and CCFNB is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and CCFNB Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CCFNB Bancorp 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 CCFNB Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CCFNB Bancorp has no effect on the direction of Merck i.e., Merck and CCFNB Bancorp go up and down completely randomly.
Pair Corralation between Merck and CCFNB Bancorp
Considering the 90-day investment horizon Merck Company is expected to under-perform the CCFNB Bancorp. But the stock apears to be less risky and, when comparing its historical volatility, Merck Company is 1.49 times less risky than CCFNB Bancorp. The stock trades about -0.14 of its potential returns per unit of risk. The CCFNB Bancorp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 3,475 in CCFNB Bancorp on October 26, 2024 and sell it today you would earn a total of 1,025 from holding CCFNB Bancorp or generate 29.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.39% |
| Values | Daily Returns |
Merck Company vs. CCFNB Bancorp
Performance |
| Timeline |
| Merck Company |
| CCFNB Bancorp |
Merck and CCFNB Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and CCFNB Bancorp
The main advantage of trading using opposite Merck and CCFNB Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, CCFNB Bancorp 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 CCFNB Bancorp will offset losses from the drop in CCFNB Bancorp's long position.| Merck vs. Collegium Pharmaceutical | Merck vs. Phibro Animal Health | Merck vs. ANI Pharmaceuticals | Merck vs. Procaps Group SA |
| CCFNB Bancorp vs. Susquehanna Community Financial | CCFNB Bancorp vs. Mifflinburg Bancorp | CCFNB Bancorp vs. Woodlands Financial Services | CCFNB Bancorp vs. Penns Woods Bancorp |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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