Correlation Between Merck and Nuveen Floating
Can any of the company-specific risk be diversified away by investing in both Merck and Nuveen Floating 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 Nuveen Floating into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Nuveen Floating Rate, you can compare the effects of market volatilities on Merck and Nuveen Floating 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 Nuveen Floating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Nuveen Floating.
Diversification Opportunities for Merck and Nuveen Floating
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Merck and Nuveen is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Nuveen Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Floating Rate 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 Nuveen Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Floating Rate has no effect on the direction of Merck i.e., Merck and Nuveen Floating go up and down completely randomly.
Pair Corralation between Merck and Nuveen Floating
Considering the 90-day investment horizon Merck Company is expected to under-perform the Nuveen Floating. In addition to that, Merck is 1.43 times more volatile than Nuveen Floating Rate. It trades about 0.0 of its total potential returns per unit of risk. Nuveen Floating Rate is currently generating about 0.02 per unit of volatility. If you would invest 768.00 in Nuveen Floating Rate on August 24, 2024 and sell it today you would earn a total of 15.00 from holding Nuveen Floating Rate or generate 1.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 32.06% |
| Values | Daily Returns |
Merck Company vs. Nuveen Floating Rate
Performance |
| Timeline |
| Merck Company |
| Nuveen Floating Rate |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Merck and Nuveen Floating Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Nuveen Floating
The main advantage of trading using opposite Merck and Nuveen Floating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Nuveen Floating 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 Nuveen Floating will offset losses from the drop in Nuveen Floating's long position.The idea behind Merck Company and Nuveen Floating Rate 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.| Nuveen Floating vs. Nuveen Floating Rate | Nuveen Floating vs. Blackrock Muni Intermediate | Nuveen Floating vs. Eaton Vance Senior | Nuveen Floating vs. Blackrock Floating Rate |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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