Correlation Between Merck and Eaton Vance
Can any of the company-specific risk be diversified away by investing in both Merck and Eaton Vance 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 Eaton Vance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Eaton Vance Tax, you can compare the effects of market volatilities on Merck and Eaton Vance 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 Eaton Vance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Eaton Vance.
Diversification Opportunities for Merck and Eaton Vance
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Merck and Eaton is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Eaton Vance Tax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance Tax 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 Eaton Vance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eaton Vance Tax has no effect on the direction of Merck i.e., Merck and Eaton Vance go up and down completely randomly.
Pair Corralation between Merck and Eaton Vance
Considering the 90-day investment horizon Merck Company is expected to under-perform the Eaton Vance. In addition to that, Merck is 1.55 times more volatile than Eaton Vance Tax. It trades about -0.1 of its total potential returns per unit of risk. Eaton Vance Tax is currently generating about 0.0 per unit of volatility. If you would invest 2,583 in Eaton Vance Tax on August 28, 2024 and sell it today you would lose (2.00) from holding Eaton Vance Tax or give up 0.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merck Company vs. Eaton Vance Tax
Performance |
| Timeline |
| Merck Company |
| Eaton Vance Tax |
Merck and Eaton Vance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Eaton Vance
The main advantage of trading using opposite Merck and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Eaton Vance 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 Eaton Vance will offset losses from the drop in Eaton Vance's long position.| Merck vs. Capricor Therapeutics | Merck vs. Soleno Therapeutics | Merck vs. Bio Path Holdings | Merck vs. Moleculin Biotech |
| Eaton Vance vs. Eaton Vance Tax | Eaton Vance vs. Eaton Vance Risk | Eaton Vance vs. Eaton Vance Tax | Eaton Vance vs. Eaton Vance Tax |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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