Correlation Between Merck and Clearbridge Variable
Can any of the company-specific risk be diversified away by investing in both Merck and Clearbridge Variable 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 Clearbridge Variable into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Clearbridge Variable Appreciation, you can compare the effects of market volatilities on Merck and Clearbridge Variable 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 Clearbridge Variable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Clearbridge Variable.
Diversification Opportunities for Merck and Clearbridge Variable
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Merck and Clearbridge is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Clearbridge Variable Appreciat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearbridge Variable 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 Clearbridge Variable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearbridge Variable has no effect on the direction of Merck i.e., Merck and Clearbridge Variable go up and down completely randomly.
Pair Corralation between Merck and Clearbridge Variable
Considering the 90-day investment horizon Merck Company is expected to under-perform the Clearbridge Variable. In addition to that, Merck is 1.57 times more volatile than Clearbridge Variable Appreciation. It trades about -0.08 of its total potential returns per unit of risk. Clearbridge Variable Appreciation is currently generating about 0.22 per unit of volatility. If you would invest 6,889 in Clearbridge Variable Appreciation on August 29, 2024 and sell it today you would earn a total of 273.00 from holding Clearbridge Variable Appreciation or generate 3.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merck Company vs. Clearbridge Variable Appreciat
Performance |
| Timeline |
| Merck Company |
| Clearbridge Variable |
Merck and Clearbridge Variable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Clearbridge Variable
The main advantage of trading using opposite Merck and Clearbridge Variable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Clearbridge Variable 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 Clearbridge Variable will offset losses from the drop in Clearbridge Variable's long position.| Merck vs. Capricor Therapeutics | Merck vs. Soleno Therapeutics | Merck vs. Bio Path Holdings | Merck vs. Moleculin Biotech |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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