Correlation Between Merck and T Rex
Can any of the company-specific risk be diversified away by investing in both Merck and T Rex 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 T Rex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and T Rex 2X Inverse, you can compare the effects of market volatilities on Merck and T Rex 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 T Rex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and T Rex.
Diversification Opportunities for Merck and T Rex
Very good diversification
The 3 months correlation between Merck and ETQ is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and T Rex 2X Inverse in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T Rex 2X 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 T Rex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of T Rex 2X has no effect on the direction of Merck i.e., Merck and T Rex go up and down completely randomly.
Pair Corralation between Merck and T Rex
Considering the 90-day investment horizon Merck Company is expected to generate 0.13 times more return on investment than T Rex. However, Merck Company is 7.75 times less risky than T Rex. It trades about -0.14 of its potential returns per unit of risk. T Rex 2X Inverse is currently generating about -0.27 per unit of risk. If you would invest 10,969 in Merck Company on September 13, 2024 and sell it today you would lose (844.00) from holding Merck Company or give up 7.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 81.4% |
| Values | Daily Returns |
Merck Company vs. T Rex 2X Inverse
Performance |
| Timeline |
| Merck Company |
| T Rex 2X |
Merck and T Rex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and T Rex
The main advantage of trading using opposite Merck and T Rex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, T Rex 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 T Rex will offset losses from the drop in T Rex's long position.The idea behind Merck Company and T Rex 2X Inverse 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.| T Rex vs. ProShares Trust | T Rex vs. iShares Ethereum Trust | T Rex vs. ProShares Trust | T Rex vs. Grayscale Ethereum Trust |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
Other Complementary Tools
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals |