Correlation Between Merck and Green Plains
Can any of the company-specific risk be diversified away by investing in both Merck and Green Plains 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 Green Plains into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Green Plains Partners, you can compare the effects of market volatilities on Merck and Green Plains 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 Green Plains. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Green Plains.
Diversification Opportunities for Merck and Green Plains
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Merck and Green is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Green Plains Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green Plains Partners 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 Green Plains. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green Plains Partners has no effect on the direction of Merck i.e., Merck and Green Plains go up and down completely randomly.
Pair Corralation between Merck and Green Plains
If you would invest 10,093 in Merck Company on September 4, 2024 and sell it today you would lose (32.00) from holding Merck Company or give up 0.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 0.34% |
| Values | Daily Returns |
Merck Company vs. Green Plains Partners
Performance |
| Timeline |
| Merck Company |
| Green Plains Partners |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Merck and Green Plains Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Green Plains
The main advantage of trading using opposite Merck and Green Plains positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Green Plains 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 Green Plains will offset losses from the drop in Green Plains' long position.| Merck vs. Crinetics Pharmaceuticals | Merck vs. Enanta Pharmaceuticals | Merck vs. Amicus Therapeutics | Merck vs. Connect Biopharma Holdings |
| Green Plains vs. Plains All American | Green Plains vs. Genesis Energy LP | Green Plains vs. Western Midstream Partners | Green Plains vs. Hess Midstream Partners |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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