Correlation Between Merck and LF Capital
Can any of the company-specific risk be diversified away by investing in both Merck and LF Capital 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 LF Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and LF Capital Acquisition, you can compare the effects of market volatilities on Merck and LF Capital 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 LF Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and LF Capital.
Diversification Opportunities for Merck and LF Capital
-0.94 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Merck and LFAC is -0.94. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and LF Capital Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LF Capital Acquisition 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 LF Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LF Capital Acquisition has no effect on the direction of Merck i.e., Merck and LF Capital go up and down completely randomly.
Pair Corralation between Merck and LF Capital
If you would invest 1,073 in LF Capital Acquisition on August 29, 2024 and sell it today you would earn a total of 0.00 from holding LF Capital Acquisition or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 2.33% |
| Values | Daily Returns |
Merck Company vs. LF Capital Acquisition
Performance |
| Timeline |
| Merck Company |
| LF Capital Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Merck and LF Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and LF Capital
The main advantage of trading using opposite Merck and LF Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, LF Capital 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 LF Capital will offset losses from the drop in LF Capital's long position.| Merck vs. Pharvaris BV | Merck vs. Brinker International | Merck vs. Alcoa Corp | Merck vs. Direxion Daily FTSE |
| LF Capital vs. Swiftmerge Acquisition Corp | LF Capital vs. Latamgrowth SPAC Unit | LF Capital vs. TLGY Acquisition Corp | LF Capital vs. Qomolangma Acquisition Corp |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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