Correlation Between Merck and DBX ETF
Can any of the company-specific risk be diversified away by investing in both Merck and DBX 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 DBX 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 DBX ETF Trust, you can compare the effects of market volatilities on Merck and DBX 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 DBX ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and DBX ETF.
Diversification Opportunities for Merck and DBX ETF
Pay attention - limited upside
The 3 months correlation between Merck and DBX is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and DBX ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DBX 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 DBX ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DBX ETF Trust has no effect on the direction of Merck i.e., Merck and DBX ETF go up and down completely randomly.
Pair Corralation between Merck and DBX ETF
If you would invest 10,187 in Merck Company on September 5, 2024 and sell it today you would lose (2.00) from holding Merck Company or give up 0.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 9.09% |
| Values | Daily Returns |
Merck Company vs. DBX ETF Trust
Performance |
| Timeline |
| Merck Company |
| DBX ETF Trust |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
Merck and DBX ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and DBX ETF
The main advantage of trading using opposite Merck and DBX ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, DBX 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 DBX ETF will offset losses from the drop in DBX ETF's long position.| Merck vs. Crinetics Pharmaceuticals | Merck vs. Enanta Pharmaceuticals | Merck vs. Amicus Therapeutics | Merck vs. Connect Biopharma Holdings |
| DBX ETF vs. Xtrackers MSCI EAFE | DBX ETF vs. SPDR MSCI Emerging | DBX ETF vs. NuShares ETF Trust | DBX ETF vs. Xtrackers MSCI USA |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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