Correlation Between Merck and Grupo México
Can any of the company-specific risk be diversified away by investing in both Merck and Grupo México 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 Grupo México into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Grupo Mxico SAB, you can compare the effects of market volatilities on Merck and Grupo México 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 Grupo México. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Grupo México.
Diversification Opportunities for Merck and Grupo México
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Merck and Grupo is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Grupo Mxico SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Mxico SAB 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 Grupo México. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Mxico SAB has no effect on the direction of Merck i.e., Merck and Grupo México go up and down completely randomly.
Pair Corralation between Merck and Grupo México
Considering the 90-day investment horizon Merck is expected to generate 90.0 times less return on investment than Grupo México. But when comparing it to its historical volatility, Merck Company is 2.12 times less risky than Grupo México. It trades about 0.0 of its potential returns per unit of risk. Grupo Mxico SAB is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 383.00 in Grupo Mxico SAB on September 3, 2024 and sell it today you would earn a total of 120.00 from holding Grupo Mxico SAB or generate 31.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merck Company vs. Grupo Mxico SAB
Performance |
| Timeline |
| Merck Company |
| Grupo Mxico SAB |
Merck and Grupo México Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Grupo México
The main advantage of trading using opposite Merck and Grupo México positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Grupo México 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 Grupo México will offset losses from the drop in Grupo México's long position.| Merck vs. Pfizer Inc | Merck vs. Johnson Johnson | Merck vs. Highway Holdings Limited | Merck vs. QCR Holdings |
| Grupo México vs. Qubec Nickel Corp | Grupo México vs. IGO Limited | Grupo México vs. Avarone Metals | Grupo México vs. Adriatic Metals PLC |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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