Correlation Between Merck and Graf Acquisition
Can any of the company-specific risk be diversified away by investing in both Merck and Graf Acquisition 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 Graf Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Graf Acquisition Corp, you can compare the effects of market volatilities on Merck and Graf Acquisition 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 Graf Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Graf Acquisition.
Diversification Opportunities for Merck and Graf Acquisition
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Merck and Graf is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Graf Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graf Acquisition Corp 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 Graf Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graf Acquisition Corp has no effect on the direction of Merck i.e., Merck and Graf Acquisition go up and down completely randomly.
Pair Corralation between Merck and Graf Acquisition
If you would invest 1,042 in Graf Acquisition Corp on October 25, 2024 and sell it today you would earn a total of 0.00 from holding Graf Acquisition Corp or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 5.26% |
| Values | Daily Returns |
Merck Company vs. Graf Acquisition Corp
Performance |
| Timeline |
| Merck Company |
| Graf Acquisition Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Merck and Graf Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Graf Acquisition
The main advantage of trading using opposite Merck and Graf Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Graf Acquisition 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 Graf Acquisition will offset losses from the drop in Graf Acquisition's long position.The idea behind Merck Company and Graf Acquisition Corp 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.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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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