Correlation Between Merck and Haemonetics
Can any of the company-specific risk be diversified away by investing in both Merck and Haemonetics 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 Haemonetics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Haemonetics, you can compare the effects of market volatilities on Merck and Haemonetics 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 Haemonetics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Haemonetics.
Diversification Opportunities for Merck and Haemonetics
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Merck and Haemonetics is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Haemonetics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haemonetics 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 Haemonetics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haemonetics has no effect on the direction of Merck i.e., Merck and Haemonetics go up and down completely randomly.
Pair Corralation between Merck and Haemonetics
Considering the 90-day investment horizon Merck Company is expected to under-perform the Haemonetics. But the stock apears to be less risky and, when comparing its historical volatility, Merck Company is 2.47 times less risky than Haemonetics. The stock trades about -0.1 of its potential returns per unit of risk. The Haemonetics is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 7,573 in Haemonetics on August 28, 2024 and sell it today you would earn a total of 1,273 from holding Haemonetics or generate 16.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Merck Company vs. Haemonetics
Performance |
| Timeline |
| Merck Company |
| Haemonetics |
Merck and Haemonetics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Haemonetics
The main advantage of trading using opposite Merck and Haemonetics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Haemonetics 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 Haemonetics will offset losses from the drop in Haemonetics' long position.| Merck vs. Capricor Therapeutics | Merck vs. Soleno Therapeutics | Merck vs. Bio Path Holdings | Merck vs. Moleculin Biotech |
| Haemonetics vs. Merit Medical Systems | Haemonetics vs. AngioDynamics | Haemonetics vs. AptarGroup | Haemonetics vs. Envista Holdings Corp |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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