Correlation Between Merck and EA Series
Can any of the company-specific risk be diversified away by investing in both Merck and EA 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 EA 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 EA Series Trust, you can compare the effects of market volatilities on Merck and EA 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 EA Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and EA Series.
Diversification Opportunities for Merck and EA Series
Very good diversification
The 3 months correlation between Merck and FTWO is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and EA Series Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EA Series Trust 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 EA Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EA Series Trust has no effect on the direction of Merck i.e., Merck and EA Series go up and down completely randomly.
Pair Corralation between Merck and EA Series
Considering the 90-day investment horizon Merck Company is expected to under-perform the EA Series. In addition to that, Merck is 1.18 times more volatile than EA Series Trust. It trades about -0.18 of its total potential returns per unit of risk. EA Series Trust is currently generating about 0.02 per unit of volatility. If you would invest 3,173 in EA Series Trust on August 27, 2024 and sell it today you would earn a total of 10.00 from holding EA Series Trust or generate 0.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merck Company vs. EA Series Trust
Performance |
| Timeline |
| Merck Company |
| EA Series Trust |
Merck and EA Series Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and EA Series
The main advantage of trading using opposite Merck and EA Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, EA 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 EA Series will offset losses from the drop in EA Series' long position.| Merck vs. Capricor Therapeutics | Merck vs. Soleno Therapeutics | Merck vs. Bio Path Holdings | Merck vs. Moleculin Biotech |
| EA Series vs. iShares Dividend and | EA Series vs. Martin Currie Sustainable | EA Series vs. VictoryShares THB Mid | EA Series vs. Mast Global Battery |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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