Correlation Between Merck and WisdomTree MidCap
Can any of the company-specific risk be diversified away by investing in both Merck and WisdomTree MidCap 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 WisdomTree MidCap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and WisdomTree MidCap Dividend, you can compare the effects of market volatilities on Merck and WisdomTree MidCap 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 WisdomTree MidCap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and WisdomTree MidCap.
Diversification Opportunities for Merck and WisdomTree MidCap
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Merck and WisdomTree is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and WisdomTree MidCap Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree MidCap 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 WisdomTree MidCap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree MidCap has no effect on the direction of Merck i.e., Merck and WisdomTree MidCap go up and down completely randomly.
Pair Corralation between Merck and WisdomTree MidCap
Considering the 90-day investment horizon Merck Company is expected to generate 1.9 times more return on investment than WisdomTree MidCap. However, Merck is 1.9 times more volatile than WisdomTree MidCap Dividend. It trades about 0.32 of its potential returns per unit of risk. WisdomTree MidCap Dividend is currently generating about 0.18 per unit of risk. If you would invest 9,018 in Merck Company on November 11, 2025 and sell it today you would earn a total of 3,175 from holding Merck Company or generate 35.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merck Company vs. WisdomTree MidCap Dividend
Performance |
| Timeline |
| Merck Company |
| WisdomTree MidCap |
Merck and WisdomTree MidCap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and WisdomTree MidCap
The main advantage of trading using opposite Merck and WisdomTree MidCap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, WisdomTree MidCap 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 WisdomTree MidCap will offset losses from the drop in WisdomTree MidCap's long position.| Merck vs. Cencora | Merck vs. Regeneron Pharmaceuticals | Merck vs. IDEXX Laboratories | Merck vs. Haleon plc |
| WisdomTree MidCap vs. WisdomTree Emerging Markets | WisdomTree MidCap vs. WisdomTree Japan Hedged | WisdomTree MidCap vs. iShares Financials ETF | WisdomTree MidCap vs. iShares Exponential Technologies |
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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