Correlation Between Merck and Nissan
Can any of the company-specific risk be diversified away by investing in both Merck and Nissan 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 Nissan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Nissan Motor Co, you can compare the effects of market volatilities on Merck and Nissan 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 Nissan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Nissan.
Diversification Opportunities for Merck and Nissan
Pay attention - limited upside
The 3 months correlation between Merck and Nissan is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Nissan Motor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nissan Motor 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 Nissan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nissan Motor has no effect on the direction of Merck i.e., Merck and Nissan go up and down completely randomly.
Pair Corralation between Merck and Nissan
If you would invest 868.00 in Nissan Motor Co on August 28, 2024 and sell it today you would earn a total of 0.00 from holding Nissan Motor Co or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 4.76% |
| Values | Daily Returns |
Merck Company vs. Nissan Motor Co
Performance |
| Timeline |
| Merck Company |
| Nissan Motor |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Merck and Nissan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Nissan
The main advantage of trading using opposite Merck and Nissan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Nissan 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 Nissan will offset losses from the drop in Nissan's long position.| Merck vs. Capricor Therapeutics | Merck vs. Soleno Therapeutics | Merck vs. Bio Path Holdings | Merck vs. Moleculin Biotech |
| Nissan vs. Honda Motor Co | Nissan vs. Toyota Motor | Nissan vs. Hyundai Motor Co | Nissan vs. Bayerische Motoren Werke |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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