Correlation Between Merck and Citrine Global
Can any of the company-specific risk be diversified away by investing in both Merck and Citrine Global 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 Citrine Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Citrine Global Corp, you can compare the effects of market volatilities on Merck and Citrine Global 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 Citrine Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Citrine Global.
Diversification Opportunities for Merck and Citrine Global
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Merck and Citrine is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Citrine Global Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citrine Global 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 Citrine Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citrine Global Corp has no effect on the direction of Merck i.e., Merck and Citrine Global go up and down completely randomly.
Pair Corralation between Merck and Citrine Global
Considering the 90-day investment horizon Merck Company is expected to generate 0.15 times more return on investment than Citrine Global. However, Merck Company is 6.61 times less risky than Citrine Global. It trades about -0.16 of its potential returns per unit of risk. Citrine Global Corp is currently generating about -0.18 per unit of risk. If you would invest 11,581 in Merck Company on September 2, 2024 and sell it today you would lose (1,417) from holding Merck Company or give up 12.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 98.46% |
| Values | Daily Returns |
Merck Company vs. Citrine Global Corp
Performance |
| Timeline |
| Merck Company |
| Citrine Global Corp |
Merck and Citrine Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Citrine Global
The main advantage of trading using opposite Merck and Citrine Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Citrine Global 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 Citrine Global will offset losses from the drop in Citrine Global's long position.The idea behind Merck Company and Citrine Global 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.| Citrine Global vs. Mills Music Trust | Citrine Global vs. Blue Water Ventures | Citrine Global vs. DATA Communications Management | Citrine Global vs. Mitie Group Plc |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Bonds Directory Find actively traded corporate debentures issued by US companies |