Correlation Between Merck and First Citizens
Can any of the company-specific risk be diversified away by investing in both Merck and First Citizens 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 First Citizens into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and First Citizens BancShares, you can compare the effects of market volatilities on Merck and First Citizens 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 First Citizens. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and First Citizens.
Diversification Opportunities for Merck and First Citizens
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Merck and First is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and First Citizens BancShares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Citizens BancShares 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 First Citizens. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Citizens BancShares has no effect on the direction of Merck i.e., Merck and First Citizens go up and down completely randomly.
Pair Corralation between Merck and First Citizens
Considering the 90-day investment horizon Merck Company is expected to under-perform the First Citizens. But the stock apears to be less risky and, when comparing its historical volatility, Merck Company is 3.17 times less risky than First Citizens. The stock trades about 0.0 of its potential returns per unit of risk. The First Citizens BancShares is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 171,329 in First Citizens BancShares on September 2, 2024 and sell it today you would earn a total of 20,671 from holding First Citizens BancShares or generate 12.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merck Company vs. First Citizens BancShares
Performance |
| Timeline |
| Merck Company |
| First Citizens BancShares |
Merck and First Citizens Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and First Citizens
The main advantage of trading using opposite Merck and First Citizens positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, First Citizens 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 First Citizens will offset losses from the drop in First Citizens' long position.The idea behind Merck Company and First Citizens BancShares 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.| First Citizens vs. First Citizens BancShares | First Citizens vs. Farmers And Merchants | First Citizens vs. Fentura Financial | First Citizens vs. First Keystone Corp |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins |