Correlation Between Merck and Troilus Gold
Can any of the company-specific risk be diversified away by investing in both Merck and Troilus Gold 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 Troilus Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Troilus Gold Corp, you can compare the effects of market volatilities on Merck and Troilus Gold 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 Troilus Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Troilus Gold.
Diversification Opportunities for Merck and Troilus Gold
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Merck and Troilus is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Troilus Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Troilus Gold Corp 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 Troilus Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Troilus Gold Corp has no effect on the direction of Merck i.e., Merck and Troilus Gold go up and down completely randomly.
Pair Corralation between Merck and Troilus Gold
Considering the 90-day investment horizon Merck Company is expected to generate 0.28 times more return on investment than Troilus Gold. However, Merck Company is 3.61 times less risky than Troilus Gold. It trades about -0.02 of its potential returns per unit of risk. Troilus Gold Corp is currently generating about -0.01 per unit of risk. If you would invest 10,738 in Merck Company on November 27, 2024 and sell it today you would lose (1,611) from holding Merck Company or give up 15.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merck Company vs. Troilus Gold Corp
Performance |
| Timeline |
| Merck Company |
| Troilus Gold Corp |
Merck and Troilus Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Troilus Gold
The main advantage of trading using opposite Merck and Troilus Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Troilus Gold 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 Troilus Gold will offset losses from the drop in Troilus Gold's long position.The idea behind Merck Company and Troilus Gold Corp 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.| Troilus Gold vs. Salazar Resources Limited | Troilus Gold vs. Gensource Potash | Troilus Gold vs. Avarone Metals | Troilus Gold vs. Aurelia Metals 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation |