Correlation Between Merck and Harbor ETF
Can any of the company-specific risk be diversified away by investing in both Merck and Harbor ETF 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 Harbor ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Harbor ETF Trust, you can compare the effects of market volatilities on Merck and Harbor ETF 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 Harbor ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Harbor ETF.
Diversification Opportunities for Merck and Harbor ETF
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Merck and Harbor is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Harbor ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harbor ETF 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 Harbor ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harbor ETF Trust has no effect on the direction of Merck i.e., Merck and Harbor ETF go up and down completely randomly.
Pair Corralation between Merck and Harbor ETF
Considering the 90-day investment horizon Merck is expected to generate 55.59 times less return on investment than Harbor ETF. But when comparing it to its historical volatility, Merck Company is 1.31 times less risky than Harbor ETF. It trades about 0.01 of its potential returns per unit of risk. Harbor ETF Trust is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 3,270 in Harbor ETF Trust on September 5, 2024 and sell it today you would earn a total of 294.00 from holding Harbor ETF Trust or generate 8.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merck Company vs. Harbor ETF Trust
Performance |
| Timeline |
| Merck Company |
| Harbor ETF Trust |
Merck and Harbor ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Harbor ETF
The main advantage of trading using opposite Merck and Harbor ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Harbor ETF 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 Harbor ETF will offset losses from the drop in Harbor ETF's long position.| Merck vs. Crinetics Pharmaceuticals | Merck vs. Enanta Pharmaceuticals | Merck vs. Amicus Therapeutics | Merck vs. Connect Biopharma Holdings |
| Harbor ETF vs. FT Vest Equity | Harbor ETF vs. Northern Lights | Harbor ETF vs. Dimensional International High | Harbor ETF vs. JPMorgan Fundamental Data |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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