Correlation Between Merck and Victory Munder
Can any of the company-specific risk be diversified away by investing in both Merck and Victory Munder 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 Victory Munder into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Victory Munder Mid Cap, you can compare the effects of market volatilities on Merck and Victory Munder 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 Victory Munder. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Victory Munder.
Diversification Opportunities for Merck and Victory Munder
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Merck and Victory is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Victory Munder Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victory Munder Mid 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 Victory Munder. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victory Munder Mid has no effect on the direction of Merck i.e., Merck and Victory Munder go up and down completely randomly.
Pair Corralation between Merck and Victory Munder
Considering the 90-day investment horizon Merck Company is expected to under-perform the Victory Munder. In addition to that, Merck is 3.91 times more volatile than Victory Munder Mid Cap. It trades about -0.13 of its total potential returns per unit of risk. Victory Munder Mid Cap is currently generating about -0.37 per unit of volatility. If you would invest 1,410 in Victory Munder Mid Cap on November 27, 2024 and sell it today you would lose (69.00) from holding Victory Munder Mid Cap or give up 4.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Merck Company vs. Victory Munder Mid Cap
Performance |
| Timeline |
| Merck Company |
| Victory Munder Mid |
Merck and Victory Munder Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Victory Munder
The main advantage of trading using opposite Merck and Victory Munder positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Victory Munder 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 Victory Munder will offset losses from the drop in Victory Munder's long position.The idea behind Merck Company and Victory Munder Mid Cap pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Victory Munder vs. Victory Trivalent International | Victory Munder vs. Victory Diversified Stock | Victory Munder vs. Victory Sophus Emerging | Victory Munder vs. Victory Diversified Stock |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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