Correlation Between Merck and Palladyne
Can any of the company-specific risk be diversified away by investing in both Merck and Palladyne 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 Palladyne into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Palladyne AI Corp, you can compare the effects of market volatilities on Merck and Palladyne 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 Palladyne. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Palladyne.
Diversification Opportunities for Merck and Palladyne
Very good diversification
The 3 months correlation between Merck and Palladyne is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Palladyne AI Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Palladyne AI Corp 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 Palladyne. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Palladyne AI Corp has no effect on the direction of Merck i.e., Merck and Palladyne go up and down completely randomly.
Pair Corralation between Merck and Palladyne
Considering the 90-day investment horizon Merck Company is expected to under-perform the Palladyne. But the stock apears to be less risky and, when comparing its historical volatility, Merck Company is 19.09 times less risky than Palladyne. The stock trades about -0.18 of its potential returns per unit of risk. The Palladyne AI Corp is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 179.00 in Palladyne AI Corp on August 29, 2024 and sell it today you would earn a total of 542.00 from holding Palladyne AI Corp or generate 302.79% 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. Palladyne AI Corp
Performance |
| Timeline |
| Merck Company |
| Palladyne AI Corp |
Merck and Palladyne Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Palladyne
The main advantage of trading using opposite Merck and Palladyne positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Palladyne 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 Palladyne will offset losses from the drop in Palladyne's long position.| Merck vs. Pharvaris BV | Merck vs. Brinker International | Merck vs. Alcoa Corp | Merck vs. Direxion Daily FTSE |
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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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