Correlation Between Merck and IShares Core
Can any of the company-specific risk be diversified away by investing in both Merck and IShares Core 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 IShares Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and iShares Core Dividend, you can compare the effects of market volatilities on Merck and IShares Core 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 IShares Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and IShares Core.
Diversification Opportunities for Merck and IShares Core
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Merck and IShares is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and iShares Core Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core Dividend 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 IShares Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core Dividend has no effect on the direction of Merck i.e., Merck and IShares Core go up and down completely randomly.
Pair Corralation between Merck and IShares Core
Considering the 90-day investment horizon Merck Company is expected to generate 2.17 times more return on investment than IShares Core. However, Merck is 2.17 times more volatile than iShares Core Dividend. It trades about 0.09 of its potential returns per unit of risk. iShares Core Dividend is currently generating about -0.07 per unit of risk. If you would invest 9,074 in Merck Company on December 6, 2024 and sell it today you would earn a total of 245.00 from holding Merck Company or generate 2.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Merck Company vs. iShares Core Dividend
Performance |
| Timeline |
| Merck Company |
| iShares Core Dividend |
Merck and IShares Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and IShares Core
The main advantage of trading using opposite Merck and IShares Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, IShares Core 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 IShares Core will offset losses from the drop in IShares Core's long position.The idea behind Merck Company and iShares Core Dividend 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.| IShares Core vs. iShares Core High | IShares Core vs. Schwab Dividend Equity | IShares Core vs. ProShares SP 500 | IShares Core vs. Invesco SP 500 |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
Other Complementary Tools
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |