Correlation Between Merck and Intuitive Surgical
Can any of the company-specific risk be diversified away by investing in both Merck and Intuitive Surgical 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 Intuitive Surgical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Intuitive Surgical, you can compare the effects of market volatilities on Merck and Intuitive Surgical 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 Intuitive Surgical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Intuitive Surgical.
Diversification Opportunities for Merck and Intuitive Surgical
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Merck and Intuitive is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Intuitive Surgical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intuitive Surgical 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 Intuitive Surgical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intuitive Surgical has no effect on the direction of Merck i.e., Merck and Intuitive Surgical go up and down completely randomly.
Pair Corralation between Merck and Intuitive Surgical
Considering the 90-day investment horizon Merck Company is expected to under-perform the Intuitive Surgical. But the stock apears to be less risky and, when comparing its historical volatility, Merck Company is 1.42 times less risky than Intuitive Surgical. The stock trades about 0.0 of its potential returns per unit of risk. The Intuitive Surgical is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 26,631 in Intuitive Surgical on August 27, 2024 and sell it today you would earn a total of 28,156 from holding Intuitive Surgical or generate 105.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merck Company vs. Intuitive Surgical
Performance |
| Timeline |
| Merck Company |
| Intuitive Surgical |
Merck and Intuitive Surgical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Intuitive Surgical
The main advantage of trading using opposite Merck and Intuitive Surgical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Intuitive Surgical 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 Intuitive Surgical will offset losses from the drop in Intuitive Surgical's long position.| Merck vs. Capricor Therapeutics | Merck vs. Soleno Therapeutics | Merck vs. Bio Path Holdings | Merck vs. Moleculin Biotech |
| Intuitive Surgical vs. Repligen | Intuitive Surgical vs. ResMed Inc | Intuitive Surgical vs. Merit Medical Systems | Intuitive Surgical vs. ICU Medical |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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