Correlation Between Merck and Guardforce
Can any of the company-specific risk be diversified away by investing in both Merck and Guardforce 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 Guardforce into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Guardforce AI Co, you can compare the effects of market volatilities on Merck and Guardforce 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 Guardforce. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Guardforce.
Diversification Opportunities for Merck and Guardforce
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Merck and Guardforce is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Guardforce AI Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guardforce AI 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 Guardforce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guardforce AI has no effect on the direction of Merck i.e., Merck and Guardforce go up and down completely randomly.
Pair Corralation between Merck and Guardforce
Considering the 90-day investment horizon Merck Company is expected to generate 0.07 times more return on investment than Guardforce. However, Merck Company is 15.2 times less risky than Guardforce. It trades about -0.01 of its potential returns per unit of risk. Guardforce AI Co is currently generating about -0.04 per unit of risk. If you would invest 10,373 in Merck Company on August 30, 2024 and sell it today you would lose (61.00) from holding Merck Company or give up 0.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merck Company vs. Guardforce AI Co
Performance |
| Timeline |
| Merck Company |
| Guardforce AI |
Merck and Guardforce Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Guardforce
The main advantage of trading using opposite Merck and Guardforce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Guardforce 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 Guardforce will offset losses from the drop in Guardforce's long position.| Merck vs. Pharvaris BV | Merck vs. Brinker International | Merck vs. Alcoa Corp | Merck vs. Direxion Daily FTSE |
| Guardforce vs. Merck Company | Guardforce vs. Pharvaris BV | Guardforce vs. Brinker International | Guardforce vs. Alcoa 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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