Correlation Between Merck and Innovator ETFs
Can any of the company-specific risk be diversified away by investing in both Merck and Innovator ETFs 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 Innovator ETFs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Innovator ETFs Trust, you can compare the effects of market volatilities on Merck and Innovator ETFs 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 Innovator ETFs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Innovator ETFs.
Diversification Opportunities for Merck and Innovator ETFs
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Merck and Innovator is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Innovator ETFs Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator ETFs Trust 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 Innovator ETFs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator ETFs Trust has no effect on the direction of Merck i.e., Merck and Innovator ETFs go up and down completely randomly.
Pair Corralation between Merck and Innovator ETFs
Considering the 90-day investment horizon Merck Company is expected to generate 1.37 times more return on investment than Innovator ETFs. However, Merck is 1.37 times more volatile than Innovator ETFs Trust. It trades about -0.1 of its potential returns per unit of risk. Innovator ETFs Trust is currently generating about -0.15 per unit of risk. If you would invest 10,423 in Merck Company on August 28, 2024 and sell it today you would lose (307.00) from holding Merck Company or give up 2.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Merck Company vs. Innovator ETFs Trust
Performance |
| Timeline |
| Merck Company |
| Innovator ETFs Trust |
Merck and Innovator ETFs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Innovator ETFs
The main advantage of trading using opposite Merck and Innovator ETFs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Innovator ETFs 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 Innovator ETFs will offset losses from the drop in Innovator ETFs' long position.| Merck vs. Capricor Therapeutics | Merck vs. Soleno Therapeutics | Merck vs. Bio Path Holdings | Merck vs. Moleculin Biotech |
| Innovator ETFs vs. Tidal ETF Trust | Innovator ETFs vs. Capital Group Dividend | Innovator ETFs vs. Dimensional ETF Trust | Innovator ETFs vs. Pacer Developed Markets |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios |