Correlation Between Merck and Aim Treasurers
Can any of the company-specific risk be diversified away by investing in both Merck and Aim Treasurers 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 Aim Treasurers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Aim Treasurers Series, you can compare the effects of market volatilities on Merck and Aim Treasurers 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 Aim Treasurers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Aim Treasurers.
Diversification Opportunities for Merck and Aim Treasurers
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Merck and Aim is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Aim Treasurers Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aim Treasurers Series 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 Aim Treasurers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aim Treasurers Series has no effect on the direction of Merck i.e., Merck and Aim Treasurers go up and down completely randomly.
Pair Corralation between Merck and Aim Treasurers
Considering the 90-day investment horizon Merck is expected to generate 19.2 times less return on investment than Aim Treasurers. In addition to that, Merck is 8.87 times more volatile than Aim Treasurers Series. It trades about 0.0 of its total potential returns per unit of risk. Aim Treasurers Series is currently generating about 0.14 per unit of volatility. If you would invest 91.00 in Aim Treasurers Series on September 3, 2024 and sell it today you would earn a total of 9.00 from holding Aim Treasurers Series or generate 9.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merck Company vs. Aim Treasurers Series
Performance |
| Timeline |
| Merck Company |
| Aim Treasurers Series |
Merck and Aim Treasurers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Aim Treasurers
The main advantage of trading using opposite Merck and Aim Treasurers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Aim Treasurers 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 Aim Treasurers will offset losses from the drop in Aim Treasurers' long position.| Merck vs. Pfizer Inc | Merck vs. Johnson Johnson | Merck vs. Highway Holdings Limited | Merck vs. QCR Holdings |
| Aim Treasurers vs. Great West Goldman Sachs | Aim Treasurers vs. Oppenheimer Gold Special | Aim Treasurers vs. Precious Metals And | Aim Treasurers vs. Goldman Sachs Short |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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