Correlation Between Merck and Gol Linhas
Can any of the company-specific risk be diversified away by investing in both Merck and Gol Linhas 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 Gol Linhas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Gol Linhas Aereas, you can compare the effects of market volatilities on Merck and Gol Linhas 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 Gol Linhas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Gol Linhas.
Diversification Opportunities for Merck and Gol Linhas
-0.87 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Merck and Gol is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Gol Linhas Aereas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gol Linhas Aereas 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 Gol Linhas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gol Linhas Aereas has no effect on the direction of Merck i.e., Merck and Gol Linhas go up and down completely randomly.
Pair Corralation between Merck and Gol Linhas
If you would invest 438.00 in Gol Linhas Aereas on September 2, 2024 and sell it today you would earn a total of 0.00 from holding Gol Linhas Aereas or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 4.76% |
| Values | Daily Returns |
Merck Company vs. Gol Linhas Aereas
Performance |
| Timeline |
| Merck Company |
| Gol Linhas Aereas |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Merck and Gol Linhas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Gol Linhas
The main advantage of trading using opposite Merck and Gol Linhas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Gol Linhas 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 Gol Linhas will offset losses from the drop in Gol Linhas' long position.The idea behind Merck Company and Gol Linhas Aereas 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.| Gol Linhas vs. Azul SA | Gol Linhas vs. Air France KLM | Gol Linhas vs. Copa Holdings SA | Gol Linhas vs. International Consolidated Airlines |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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