Correlation Between Merck and Lion Copper
Can any of the company-specific risk be diversified away by investing in both Merck and Lion Copper 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 Lion Copper into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Lion Copper and, you can compare the effects of market volatilities on Merck and Lion Copper 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 Lion Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Lion Copper.
Diversification Opportunities for Merck and Lion Copper
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Merck and Lion is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Lion Copper and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion Copper 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 Lion Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion Copper has no effect on the direction of Merck i.e., Merck and Lion Copper go up and down completely randomly.
Pair Corralation between Merck and Lion Copper
Considering the 90-day investment horizon Merck Company is expected to under-perform the Lion Copper. But the stock apears to be less risky and, when comparing its historical volatility, Merck Company is 5.39 times less risky than Lion Copper. The stock trades about -0.08 of its potential returns per unit of risk. The Lion Copper and is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 6.00 in Lion Copper and on September 3, 2024 and sell it today you would earn a total of 0.00 from holding Lion Copper and or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merck Company vs. Lion Copper and
Performance |
| Timeline |
| Merck Company |
| Lion Copper |
Merck and Lion Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Lion Copper
The main advantage of trading using opposite Merck and Lion Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Lion Copper 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 Lion Copper will offset losses from the drop in Lion Copper's long position.| Merck vs. Pfizer Inc | Merck vs. Johnson Johnson | Merck vs. Highway Holdings Limited | Merck vs. QCR Holdings |
| Lion Copper vs. Qubec Nickel Corp | Lion Copper vs. IGO Limited | Lion Copper vs. Avarone Metals | Lion Copper vs. Adriatic Metals PLC |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
Other Complementary Tools
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital |