Correlation Between Merck and Mast Global
Can any of the company-specific risk be diversified away by investing in both Merck and Mast Global 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 Mast Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Mast Global Battery, you can compare the effects of market volatilities on Merck and Mast Global 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 Mast Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Mast Global.
Diversification Opportunities for Merck and Mast Global
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Merck and Mast is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Mast Global Battery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mast Global Battery 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 Mast Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mast Global Battery has no effect on the direction of Merck i.e., Merck and Mast Global go up and down completely randomly.
Pair Corralation between Merck and Mast Global
Considering the 90-day investment horizon Merck Company is expected to under-perform the Mast Global. But the stock apears to be less risky and, when comparing its historical volatility, Merck Company is 1.12 times less risky than Mast Global. The stock trades about -0.1 of its potential returns per unit of risk. The Mast Global Battery is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 2,601 in Mast Global Battery on August 28, 2024 and sell it today you would lose (60.00) from holding Mast Global Battery or give up 2.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merck Company vs. Mast Global Battery
Performance |
| Timeline |
| Merck Company |
| Mast Global Battery |
Merck and Mast Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Mast Global
The main advantage of trading using opposite Merck and Mast Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Mast Global 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 Mast Global will offset losses from the drop in Mast Global's long position.| Merck vs. Capricor Therapeutics | Merck vs. Soleno Therapeutics | Merck vs. Bio Path Holdings | Merck vs. Moleculin Biotech |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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