Correlation Between Merck and ETF Series
Can any of the company-specific risk be diversified away by investing in both Merck and ETF Series 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 ETF Series into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and ETF Series Solutions, you can compare the effects of market volatilities on Merck and ETF Series 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 ETF Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and ETF Series.
Diversification Opportunities for Merck and ETF Series
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Merck and ETF is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and ETF Series Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETF Series Solutions 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 ETF Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETF Series Solutions has no effect on the direction of Merck i.e., Merck and ETF Series go up and down completely randomly.
Pair Corralation between Merck and ETF Series
Considering the 90-day investment horizon Merck Company is expected to under-perform the ETF Series. In addition to that, Merck is 1.6 times more volatile than ETF Series Solutions. It trades about -0.22 of its total potential returns per unit of risk. ETF Series Solutions is currently generating about 0.03 per unit of volatility. If you would invest 3,440 in ETF Series Solutions on August 23, 2024 and sell it today you would earn a total of 17.00 from holding ETF Series Solutions or generate 0.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merck Company vs. ETF Series Solutions
Performance |
| Timeline |
| Merck Company |
| ETF Series Solutions |
Merck and ETF Series Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and ETF Series
The main advantage of trading using opposite Merck and ETF Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, ETF Series 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 ETF Series will offset losses from the drop in ETF Series' long position.| Merck vs. Johnson Johnson | Merck vs. Small Cap Core | Merck vs. Freedom Holding Corp | Merck vs. Gfl Environmental Holdings |
| ETF Series vs. Aptus Collared Income | ETF Series vs. Core Alternative ETF | ETF Series vs. Aptus Drawdown Managed | ETF Series vs. Amplify BlackSwan 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
Other Complementary Tools
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios |