Correlation Between Merck and IShares Currency
Can any of the company-specific risk be diversified away by investing in both Merck and IShares Currency 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 IShares Currency into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and iShares Currency Hedged, you can compare the effects of market volatilities on Merck and IShares Currency 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 IShares Currency. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and IShares Currency.
Diversification Opportunities for Merck and IShares Currency
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Merck and IShares is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and iShares Currency Hedged in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Currency Hedged 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 IShares Currency. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Currency Hedged has no effect on the direction of Merck i.e., Merck and IShares Currency go up and down completely randomly.
Pair Corralation between Merck and IShares Currency
Considering the 90-day investment horizon Merck Company is expected to under-perform the IShares Currency. In addition to that, Merck is 2.31 times more volatile than iShares Currency Hedged. It trades about 0.0 of its total potential returns per unit of risk. iShares Currency Hedged is currently generating about 0.04 per unit of volatility. If you would invest 3,263 in iShares Currency Hedged on September 2, 2024 and sell it today you would earn a total of 16.00 from holding iShares Currency Hedged or generate 0.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merck Company vs. iShares Currency Hedged
Performance |
| Timeline |
| Merck Company |
| iShares Currency Hedged |
Merck and IShares Currency Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and IShares Currency
The main advantage of trading using opposite Merck and IShares Currency positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, IShares Currency 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 IShares Currency will offset losses from the drop in IShares Currency's long position.The idea behind Merck Company and iShares Currency Hedged 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.| IShares Currency vs. iShares Currency Hedged | IShares Currency vs. iShares Currency Hedged | IShares Currency vs. iShares MSCI Intl | IShares Currency vs. iShares Currency Hedged |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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