Correlation Between Merck and EF Hutton
Can any of the company-specific risk be diversified away by investing in both Merck and EF Hutton 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 EF Hutton into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and EF Hutton Acquisition, you can compare the effects of market volatilities on Merck and EF Hutton 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 EF Hutton. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and EF Hutton.
Diversification Opportunities for Merck and EF Hutton
Pay attention - limited upside
The 3 months correlation between Merck and EFHT is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and EF Hutton Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EF Hutton Acquisition 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 EF Hutton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EF Hutton Acquisition has no effect on the direction of Merck i.e., Merck and EF Hutton go up and down completely randomly.
Pair Corralation between Merck and EF Hutton
If you would invest (100.00) in EF Hutton Acquisition on November 28, 2024 and sell it today you would earn a total of 100.00 from holding EF Hutton Acquisition or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Merck Company vs. EF Hutton Acquisition
Performance |
| Timeline |
| Merck Company |
| EF Hutton Acquisition |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
Merck and EF Hutton Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and EF Hutton
The main advantage of trading using opposite Merck and EF Hutton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, EF Hutton 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 EF Hutton will offset losses from the drop in EF Hutton's long position.The idea behind Merck Company and EF Hutton Acquisition 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 CEOs Directory module to screen CEOs from public companies around the world.
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