Correlation Between Merck and Capitol Series
Can any of the company-specific risk be diversified away by investing in both Merck and Capitol Series 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 Capitol Series into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Capitol Series Trust, you can compare the effects of market volatilities on Merck and Capitol Series 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 Capitol Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Capitol Series.
Diversification Opportunities for Merck and Capitol Series
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Merck and Capitol is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Capitol Series Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capitol Series Trust 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 Capitol Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capitol Series Trust has no effect on the direction of Merck i.e., Merck and Capitol Series go up and down completely randomly.
Pair Corralation between Merck and Capitol Series
Considering the 90-day investment horizon Merck Company is expected to under-perform the Capitol Series. In addition to that, Merck is 1.12 times more volatile than Capitol Series Trust. It trades about -0.02 of its total potential returns per unit of risk. Capitol Series Trust is currently generating about 0.44 per unit of volatility. If you would invest 2,733 in Capitol Series Trust on September 1, 2024 and sell it today you would earn a total of 316.00 from holding Capitol Series Trust or generate 11.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Merck Company vs. Capitol Series Trust
Performance |
| Timeline |
| Merck Company |
| Capitol Series Trust |
Merck and Capitol Series Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Capitol Series
The main advantage of trading using opposite Merck and Capitol Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Capitol Series 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 Capitol Series will offset losses from the drop in Capitol Series' long position.The idea behind Merck Company and Capitol Series Trust 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.| Capitol Series vs. WisdomTree Trust | Capitol Series vs. QRAFT AI Enhanced Large | Capitol Series vs. Northern Lights | Capitol Series vs. First Trust Exchange Traded |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
Other Complementary Tools
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum |