Correlation Between Merck and Plexus Corp
Can any of the company-specific risk be diversified away by investing in both Merck and Plexus Corp 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 Plexus Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Plexus Corp, you can compare the effects of market volatilities on Merck and Plexus Corp 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 Plexus Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Plexus Corp.
Diversification Opportunities for Merck and Plexus Corp
-0.9 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Merck and Plexus is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Plexus Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plexus 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 Plexus Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plexus Corp has no effect on the direction of Merck i.e., Merck and Plexus Corp go up and down completely randomly.
Pair Corralation between Merck and Plexus Corp
Considering the 90-day investment horizon Merck Company is expected to under-perform the Plexus Corp. But the stock apears to be less risky and, when comparing its historical volatility, Merck Company is 1.95 times less risky than Plexus Corp. The stock trades about -0.1 of its potential returns per unit of risk. The Plexus Corp is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 14,332 in Plexus Corp on August 27, 2024 and sell it today you would earn a total of 1,869 from holding Plexus Corp or generate 13.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merck Company vs. Plexus Corp
Performance |
| Timeline |
| Merck Company |
| Plexus Corp |
Merck and Plexus Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Plexus Corp
The main advantage of trading using opposite Merck and Plexus Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Plexus Corp 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 Plexus Corp will offset losses from the drop in Plexus Corp's long position.| Merck vs. Capricor Therapeutics | Merck vs. Soleno Therapeutics | Merck vs. Bio Path Holdings | Merck vs. Moleculin Biotech |
| Plexus Corp vs. Celestica | Plexus Corp vs. Benchmark Electronics | Plexus Corp vs. Flex | Plexus Corp vs. Jabil Circuit |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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