Correlation Between Merck and Phibro Animal
Can any of the company-specific risk be diversified away by investing in both Merck and Phibro Animal 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 Phibro Animal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Phibro Animal Health, you can compare the effects of market volatilities on Merck and Phibro Animal 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 Phibro Animal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Phibro Animal.
Diversification Opportunities for Merck and Phibro Animal
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Merck and Phibro is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Phibro Animal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phibro Animal Health 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 Phibro Animal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phibro Animal Health has no effect on the direction of Merck i.e., Merck and Phibro Animal go up and down completely randomly.
Pair Corralation between Merck and Phibro Animal
Considering the 90-day investment horizon Merck Company is expected to under-perform the Phibro Animal. But the stock apears to be less risky and, when comparing its historical volatility, Merck Company is 1.79 times less risky than Phibro Animal. The stock trades about -0.18 of its potential returns per unit of risk. The Phibro Animal Health is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 2,360 in Phibro Animal Health on August 27, 2024 and sell it today you would earn a total of 14.00 from holding Phibro Animal Health or generate 0.59% 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. Phibro Animal Health
Performance |
| Timeline |
| Merck Company |
| Phibro Animal Health |
Merck and Phibro Animal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Phibro Animal
The main advantage of trading using opposite Merck and Phibro Animal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Phibro Animal 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 Phibro Animal will offset losses from the drop in Phibro Animal's long position.| Merck vs. Capricor Therapeutics | Merck vs. Soleno Therapeutics | Merck vs. Bio Path Holdings | Merck vs. Moleculin Biotech |
| Phibro Animal vs. Pacira BioSciences, | Phibro Animal vs. Dr Reddys Laboratories | Phibro Animal vs. Collegium Pharmaceutical | Phibro Animal vs. ANI Pharmaceuticals |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
Other Complementary Tools
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| CEOs Directory Screen CEOs from public companies around the world |