Correlation Between Merck and Invesco KBW
Can any of the company-specific risk be diversified away by investing in both Merck and Invesco KBW 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 Invesco KBW into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Invesco KBW Property, you can compare the effects of market volatilities on Merck and Invesco KBW 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 Invesco KBW. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Invesco KBW.
Diversification Opportunities for Merck and Invesco KBW
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Merck and Invesco is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Invesco KBW Property in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco KBW Property 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 Invesco KBW. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco KBW Property has no effect on the direction of Merck i.e., Merck and Invesco KBW go up and down completely randomly.
Pair Corralation between Merck and Invesco KBW
Considering the 90-day investment horizon Merck Company is expected to under-perform the Invesco KBW. In addition to that, Merck is 1.34 times more volatile than Invesco KBW Property. It trades about 0.0 of its total potential returns per unit of risk. Invesco KBW Property is currently generating about 0.12 per unit of volatility. If you would invest 8,879 in Invesco KBW Property on September 12, 2024 and sell it today you would earn a total of 3,013 from holding Invesco KBW Property or generate 33.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Merck Company vs. Invesco KBW Property
Performance |
| Timeline |
| Merck Company |
| Invesco KBW Property |
Merck and Invesco KBW Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Invesco KBW
The main advantage of trading using opposite Merck and Invesco KBW positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Invesco KBW 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 Invesco KBW will offset losses from the drop in Invesco KBW's long position.| Merck vs. Victory Integrity Smallmid Cap | Merck vs. Hilton Worldwide Holdings | Merck vs. NVIDIA | Merck vs. JPMorgan Chase Co |
| Invesco KBW vs. Invesco SP 500 | Invesco KBW vs. Invesco SP 500 | Invesco KBW vs. Invesco SP 500 | Invesco KBW vs. Aquagold International |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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