Correlation Between Merck and Xtrackers MSCI
Can any of the company-specific risk be diversified away by investing in both Merck and Xtrackers MSCI 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 Xtrackers MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Xtrackers MSCI All, you can compare the effects of market volatilities on Merck and Xtrackers MSCI 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 Xtrackers MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Xtrackers MSCI.
Diversification Opportunities for Merck and Xtrackers MSCI
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Merck and Xtrackers is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Xtrackers MSCI All in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers MSCI All 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 Xtrackers MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers MSCI All has no effect on the direction of Merck i.e., Merck and Xtrackers MSCI go up and down completely randomly.
Pair Corralation between Merck and Xtrackers MSCI
Considering the 90-day investment horizon Merck Company is expected to under-perform the Xtrackers MSCI. In addition to that, Merck is 2.06 times more volatile than Xtrackers MSCI All. It trades about -0.1 of its total potential returns per unit of risk. Xtrackers MSCI All is currently generating about -0.14 per unit of volatility. If you would invest 3,505 in Xtrackers MSCI All on August 28, 2024 and sell it today you would lose (68.00) from holding Xtrackers MSCI All or give up 1.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Merck Company vs. Xtrackers MSCI All
Performance |
| Timeline |
| Merck Company |
| Xtrackers MSCI All |
Merck and Xtrackers MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Xtrackers MSCI
The main advantage of trading using opposite Merck and Xtrackers MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Xtrackers MSCI 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 Xtrackers MSCI will offset losses from the drop in Xtrackers MSCI's long position.| Merck vs. Capricor Therapeutics | Merck vs. Soleno Therapeutics | Merck vs. Bio Path Holdings | Merck vs. Moleculin Biotech |
| Xtrackers MSCI vs. Dimensional Core Equity | Xtrackers MSCI vs. Dimensional Emerging Core | Xtrackers MSCI vs. Dimensional Targeted Value | Xtrackers MSCI vs. Dimensional Small Cap |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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