Correlation Between Merck and Jpmorgan Active
Can any of the company-specific risk be diversified away by investing in both Merck and Jpmorgan Active 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 Jpmorgan Active into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Jpmorgan Active Small, you can compare the effects of market volatilities on Merck and Jpmorgan Active 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 Jpmorgan Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Jpmorgan Active.
Diversification Opportunities for Merck and Jpmorgan Active
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Merck and Jpmorgan is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Jpmorgan Active Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jpmorgan Active Small 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 Jpmorgan Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jpmorgan Active Small has no effect on the direction of Merck i.e., Merck and Jpmorgan Active go up and down completely randomly.
Pair Corralation between Merck and Jpmorgan Active
Considering the 90-day investment horizon Merck Company is expected to under-perform the Jpmorgan Active. But the stock apears to be less risky and, when comparing its historical volatility, Merck Company is 1.05 times less risky than Jpmorgan Active. The stock trades about -0.18 of its potential returns per unit of risk. The Jpmorgan Active Small is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 5,976 in Jpmorgan Active Small on August 29, 2024 and sell it today you would earn a total of 422.00 from holding Jpmorgan Active Small or generate 7.06% 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. Jpmorgan Active Small
Performance |
| Timeline |
| Merck Company |
| Jpmorgan Active Small |
Merck and Jpmorgan Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Jpmorgan Active
The main advantage of trading using opposite Merck and Jpmorgan Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Jpmorgan Active 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 Jpmorgan Active will offset losses from the drop in Jpmorgan Active's long position.| Merck vs. Pharvaris BV | Merck vs. Brinker International | Merck vs. Alcoa Corp | Merck vs. Direxion Daily FTSE |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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