Correlation Between Merck and Fidelity Series
Can any of the company-specific risk be diversified away by investing in both Merck and Fidelity Series 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 Fidelity Series into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Fidelity Series Growth, you can compare the effects of market volatilities on Merck and Fidelity Series 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 Fidelity Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Fidelity Series.
Diversification Opportunities for Merck and Fidelity Series
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Merck and Fidelity is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Fidelity Series Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Series Growth 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 Fidelity Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Series Growth has no effect on the direction of Merck i.e., Merck and Fidelity Series go up and down completely randomly.
Pair Corralation between Merck and Fidelity Series
Considering the 90-day investment horizon Merck Company is expected to under-perform the Fidelity Series. In addition to that, Merck is 1.11 times more volatile than Fidelity Series Growth. It trades about -0.16 of its total potential returns per unit of risk. Fidelity Series Growth is currently generating about 0.13 per unit of volatility. If you would invest 2,545 in Fidelity Series Growth on August 24, 2024 and sell it today you would earn a total of 89.00 from holding Fidelity Series Growth or generate 3.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merck Company vs. Fidelity Series Growth
Performance |
| Timeline |
| Merck Company |
| Fidelity Series Growth |
Merck and Fidelity Series Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Fidelity Series
The main advantage of trading using opposite Merck and Fidelity Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Fidelity Series 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 Fidelity Series will offset losses from the drop in Fidelity Series' long position.The idea behind Merck Company and Fidelity Series Growth 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.| Fidelity Series vs. Siit Large Cap | Fidelity Series vs. Knights Of Umbus | Fidelity Series vs. William Blair Large | Fidelity Series vs. Aqr Large Cap |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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