Correlation Between Merck and IShares Interest
Can any of the company-specific risk be diversified away by investing in both Merck and IShares Interest 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 IShares Interest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and iShares Interest Rate, you can compare the effects of market volatilities on Merck and IShares Interest 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 IShares Interest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and IShares Interest.
Diversification Opportunities for Merck and IShares Interest
-0.87 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Merck and IShares is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and iShares Interest Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Interest 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 IShares Interest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Interest Rate has no effect on the direction of Merck i.e., Merck and IShares Interest go up and down completely randomly.
Pair Corralation between Merck and IShares Interest
Considering the 90-day investment horizon Merck Company is expected to under-perform the IShares Interest. In addition to that, Merck is 6.8 times more volatile than iShares Interest Rate. It trades about -0.18 of its total potential returns per unit of risk. iShares Interest Rate is currently generating about 0.23 per unit of volatility. If you would invest 9,262 in iShares Interest Rate on August 27, 2024 and sell it today you would earn a total of 83.00 from holding iShares Interest Rate or generate 0.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merck Company vs. iShares Interest Rate
Performance |
| Timeline |
| Merck Company |
| iShares Interest Rate |
Merck and IShares Interest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and IShares Interest
The main advantage of trading using opposite Merck and IShares Interest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, IShares Interest 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 IShares Interest will offset losses from the drop in IShares Interest's long position.| Merck vs. Capricor Therapeutics | Merck vs. Soleno Therapeutics | Merck vs. Bio Path Holdings | Merck vs. Moleculin Biotech |
| IShares Interest vs. iShares Interest Rate | IShares Interest vs. iShares Interest Rate | IShares Interest vs. iShares Inflation Hedged | IShares Interest vs. ProShares Investment GradeInterest |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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