Correlation Between Merck and Global Nterpoint
Can any of the company-specific risk be diversified away by investing in both Merck and Global Nterpoint 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 Global Nterpoint into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Global Nterpoint Portfolio, you can compare the effects of market volatilities on Merck and Global Nterpoint 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 Global Nterpoint. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Global Nterpoint.
Diversification Opportunities for Merck and Global Nterpoint
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Merck and Global is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Global Nterpoint Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Nterpoint Por 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 Global Nterpoint. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Nterpoint Por has no effect on the direction of Merck i.e., Merck and Global Nterpoint go up and down completely randomly.
Pair Corralation between Merck and Global Nterpoint
Considering the 90-day investment horizon Merck is expected to generate 20.28 times less return on investment than Global Nterpoint. But when comparing it to its historical volatility, Merck Company is 1.07 times less risky than Global Nterpoint. It trades about 0.0 of its potential returns per unit of risk. Global Nterpoint Portfolio is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 942.00 in Global Nterpoint Portfolio on August 25, 2024 and sell it today you would earn a total of 265.00 from holding Global Nterpoint Portfolio or generate 28.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 80.34% |
| Values | Daily Returns |
Merck Company vs. Global Nterpoint Portfolio
Performance |
| Timeline |
| Merck Company |
| Global Nterpoint Por |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Merck and Global Nterpoint Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Global Nterpoint
The main advantage of trading using opposite Merck and Global Nterpoint positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Global Nterpoint 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 Global Nterpoint will offset losses from the drop in Global Nterpoint's long position.The idea behind Merck Company and Global Nterpoint Portfolio 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.| Global Nterpoint vs. Western Asset Municipal | Global Nterpoint vs. Acm Dynamic Opportunity | Global Nterpoint vs. Abr 7525 Volatility | Global Nterpoint vs. Falcon Focus Scv |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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