Correlation Between Merck and Lord Abbett
Can any of the company-specific risk be diversified away by investing in both Merck and Lord Abbett 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 Lord Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Lord Abbett Short, you can compare the effects of market volatilities on Merck and Lord Abbett 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 Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Lord Abbett.
Diversification Opportunities for Merck and Lord Abbett
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Merck and Lord is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Lord Abbett Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Short 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 Lord Abbett. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lord Abbett Short has no effect on the direction of Merck i.e., Merck and Lord Abbett go up and down completely randomly.
Pair Corralation between Merck and Lord Abbett
Considering the 90-day investment horizon Merck Company is expected to under-perform the Lord Abbett. In addition to that, Merck is 5.19 times more volatile than Lord Abbett Short. It trades about 0.0 of its total potential returns per unit of risk. Lord Abbett Short is currently generating about 0.15 per unit of volatility. If you would invest 829.00 in Lord Abbett Short on October 11, 2024 and sell it today you would earn a total of 157.00 from holding Lord Abbett Short or generate 18.94% 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. Lord Abbett Short
Performance |
| Timeline |
| Merck Company |
| Lord Abbett Short |
Merck and Lord Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Lord Abbett
The main advantage of trading using opposite Merck and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Lord Abbett 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 Lord Abbett will offset losses from the drop in Lord Abbett's long position.| Merck vs. Emergent Biosolutions | Merck vs. Bausch Health Companies | Merck vs. Neurocrine Biosciences | Merck vs. Teva Pharma Industries |
| Lord Abbett vs. Morningstar Aggressive Growth | Lord Abbett vs. Calamos Growth Fund | Lord Abbett vs. Needham Aggressive Growth | Lord Abbett vs. Ftfa Franklin Templeton Growth |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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