Correlation Between Merck and EMLD Old
Can any of the company-specific risk be diversified away by investing in both Merck and EMLD Old 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 EMLD Old into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and EMLD Old, you can compare the effects of market volatilities on Merck and EMLD Old 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 EMLD Old. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and EMLD Old.
Diversification Opportunities for Merck and EMLD Old
Excellent diversification
The 3 months correlation between Merck and EMLD is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and EMLD Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMLD Old 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 EMLD Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMLD Old has no effect on the direction of Merck i.e., Merck and EMLD Old go up and down completely randomly.
Pair Corralation between Merck and EMLD Old
If you would invest 1,098 in EMLD Old on October 15, 2024 and sell it today you would earn a total of 0.00 from holding EMLD Old or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 5.56% |
| Values | Daily Returns |
Merck Company vs. EMLD Old
Performance |
| Timeline |
| Merck Company |
| EMLD Old |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Merck and EMLD Old Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and EMLD Old
The main advantage of trading using opposite Merck and EMLD Old positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, EMLD Old 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 EMLD Old will offset losses from the drop in EMLD Old's long position.| Merck vs. Emergent Biosolutions | Merck vs. Bausch Health Companies | Merck vs. Neurocrine Biosciences | Merck vs. Teva Pharma Industries |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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