Correlation Between Merck and Dune Acquisition
Can any of the company-specific risk be diversified away by investing in both Merck and Dune Acquisition 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 Dune Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Dune Acquisition Corp, you can compare the effects of market volatilities on Merck and Dune Acquisition 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 Dune Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Dune Acquisition.
Diversification Opportunities for Merck and Dune Acquisition
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Merck and Dune is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Dune Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dune Acquisition Corp 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 Dune Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dune Acquisition Corp has no effect on the direction of Merck i.e., Merck and Dune Acquisition go up and down completely randomly.
Pair Corralation between Merck and Dune Acquisition
If you would invest 999.00 in Dune Acquisition Corp on September 1, 2024 and sell it today you would earn a total of 0.00 from holding Dune Acquisition Corp or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
Merck Company vs. Dune Acquisition Corp
Performance |
| Timeline |
| Merck Company |
| Dune Acquisition Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Merck and Dune Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Dune Acquisition
The main advantage of trading using opposite Merck and Dune Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Dune Acquisition 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 Dune Acquisition will offset losses from the drop in Dune Acquisition's long position.The idea behind Merck Company and Dune Acquisition Corp 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.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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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