Correlation Between Merck and Invesco Global
Can any of the company-specific risk be diversified away by investing in both Merck and Invesco Global 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 Invesco Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Invesco Global Listed, you can compare the effects of market volatilities on Merck and Invesco Global 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 Invesco Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Invesco Global.
Diversification Opportunities for Merck and Invesco Global
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Merck and Invesco is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Invesco Global Listed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Global Listed 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 Invesco Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Global Listed has no effect on the direction of Merck i.e., Merck and Invesco Global go up and down completely randomly.
Pair Corralation between Merck and Invesco Global
Considering the 90-day investment horizon Merck is expected to generate 55.95 times less return on investment than Invesco Global. In addition to that, Merck is 1.17 times more volatile than Invesco Global Listed. It trades about 0.0 of its total potential returns per unit of risk. Invesco Global Listed is currently generating about 0.11 per unit of volatility. If you would invest 5,310 in Invesco Global Listed on August 27, 2024 and sell it today you would earn a total of 1,783 from holding Invesco Global Listed or generate 33.58% 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. Invesco Global Listed
Performance |
| Timeline |
| Merck Company |
| Invesco Global Listed |
Merck and Invesco Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Invesco Global
The main advantage of trading using opposite Merck and Invesco Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Invesco Global 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 Invesco Global will offset losses from the drop in Invesco Global's long position.| Merck vs. Capricor Therapeutics | Merck vs. Soleno Therapeutics | Merck vs. Bio Path Holdings | Merck vs. Moleculin Biotech |
| Invesco Global vs. Main Sector Rotation | Invesco Global vs. Franklin Exponential Data | Invesco Global vs. Goldman Sachs Innovate |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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