Correlation Between Merck and GoGold Resources
Can any of the company-specific risk be diversified away by investing in both Merck and GoGold Resources 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 GoGold Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and GoGold Resources, you can compare the effects of market volatilities on Merck and GoGold Resources 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 GoGold Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and GoGold Resources.
Diversification Opportunities for Merck and GoGold Resources
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Merck and GoGold is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and GoGold Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoGold Resources 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 GoGold Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GoGold Resources has no effect on the direction of Merck i.e., Merck and GoGold Resources go up and down completely randomly.
Pair Corralation between Merck and GoGold Resources
Considering the 90-day investment horizon Merck Company is expected to under-perform the GoGold Resources. But the stock apears to be less risky and, when comparing its historical volatility, Merck Company is 2.49 times less risky than GoGold Resources. The stock trades about -0.11 of its potential returns per unit of risk. The GoGold Resources is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 110.00 in GoGold Resources on September 1, 2024 and sell it today you would lose (18.00) from holding GoGold Resources or give up 16.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merck Company vs. GoGold Resources
Performance |
| Timeline |
| Merck Company |
| GoGold Resources |
Merck and GoGold Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and GoGold Resources
The main advantage of trading using opposite Merck and GoGold Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, GoGold Resources 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 GoGold Resources will offset losses from the drop in GoGold Resources' long position.The idea behind Merck Company and GoGold Resources 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.| GoGold Resources vs. South32 Limited | GoGold Resources vs. NioCorp Developments Ltd | GoGold Resources vs. HUMANA INC | GoGold Resources vs. SCOR PK |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
Other Complementary Tools
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges |