Correlation Between Merck and IShares MSCI
Can any of the company-specific risk be diversified away by investing in both Merck and IShares MSCI 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 IShares MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and iShares MSCI Japan, you can compare the effects of market volatilities on Merck and IShares MSCI 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 IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and IShares MSCI.
Diversification Opportunities for Merck and IShares MSCI
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Merck and IShares is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and iShares MSCI Japan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI Japan 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 IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI Japan has no effect on the direction of Merck i.e., Merck and IShares MSCI go up and down completely randomly.
Pair Corralation between Merck and IShares MSCI
Considering the 90-day investment horizon Merck Company is expected to under-perform the IShares MSCI. In addition to that, Merck is 1.21 times more volatile than iShares MSCI Japan. It trades about -0.05 of its total potential returns per unit of risk. iShares MSCI Japan is currently generating about 0.03 per unit of volatility. If you would invest 3,014 in iShares MSCI Japan on August 28, 2024 and sell it today you would earn a total of 177.00 from holding iShares MSCI Japan or generate 5.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.52% |
| Values | Daily Returns |
Merck Company vs. iShares MSCI Japan
Performance |
| Timeline |
| Merck Company |
| iShares MSCI Japan |
Merck and IShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and IShares MSCI
The main advantage of trading using opposite Merck and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, IShares MSCI 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 IShares MSCI will offset losses from the drop in IShares MSCI's long position.| Merck vs. Capricor Therapeutics | Merck vs. Soleno Therapeutics | Merck vs. Bio Path Holdings | Merck vs. Moleculin Biotech |
| IShares MSCI vs. iShares MSCI South | IShares MSCI vs. iShares MSCI Hong | IShares MSCI vs. iShares MSCI Taiwan | IShares MSCI vs. iShares MSCI Germany |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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