Correlation Between Merck and GRAIL, LLC
Can any of the company-specific risk be diversified away by investing in both Merck and GRAIL, LLC 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 GRAIL, LLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and GRAIL, LLC, you can compare the effects of market volatilities on Merck and GRAIL, LLC 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 GRAIL, LLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and GRAIL, LLC.
Diversification Opportunities for Merck and GRAIL, LLC
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Merck and GRAIL, is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and GRAIL, LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GRAIL, LLC 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 GRAIL, LLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GRAIL, LLC has no effect on the direction of Merck i.e., Merck and GRAIL, LLC go up and down completely randomly.
Pair Corralation between Merck and GRAIL, LLC
Considering the 90-day investment horizon Merck Company is expected to generate 0.25 times more return on investment than GRAIL, LLC. However, Merck Company is 3.99 times less risky than GRAIL, LLC. It trades about 0.0 of its potential returns per unit of risk. GRAIL, LLC is currently generating about 0.0 per unit of risk. If you would invest 10,603 in Merck Company on August 31, 2024 and sell it today you would lose (439.00) from holding Merck Company or give up 4.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 30.75% |
| Values | Daily Returns |
Merck Company vs. GRAIL, LLC
Performance |
| Timeline |
| Merck Company |
| GRAIL, LLC |
Merck and GRAIL, LLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and GRAIL, LLC
The main advantage of trading using opposite Merck and GRAIL, LLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, GRAIL, LLC 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 GRAIL, LLC will offset losses from the drop in GRAIL, LLC's long position.The idea behind Merck Company and GRAIL, LLC 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.| GRAIL, LLC vs. NETGEAR | GRAIL, LLC vs. LB Foster | GRAIL, LLC vs. Coupang LLC | GRAIL, LLC vs. Pool Corporation |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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