Correlation Between Merck and Global Payout
Can any of the company-specific risk be diversified away by investing in both Merck and Global Payout 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 Global Payout into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Global Payout, you can compare the effects of market volatilities on Merck and Global Payout 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 Global Payout. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Global Payout.
Diversification Opportunities for Merck and Global Payout
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Merck and Global is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Global Payout in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Payout 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 Global Payout. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Payout has no effect on the direction of Merck i.e., Merck and Global Payout go up and down completely randomly.
Pair Corralation between Merck and Global Payout
Considering the 90-day investment horizon Merck Company is expected to under-perform the Global Payout. But the stock apears to be less risky and, when comparing its historical volatility, Merck Company is 11.06 times less risky than Global Payout. The stock trades about -0.08 of its potential returns per unit of risk. The Global Payout is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 0.03 in Global Payout on August 28, 2024 and sell it today you would earn a total of 0.00 from holding Global Payout or generate 0.0% 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. Global Payout
Performance |
| Timeline |
| Merck Company |
| Global Payout |
Merck and Global Payout Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Global Payout
The main advantage of trading using opposite Merck and Global Payout positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Global Payout 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 Global Payout will offset losses from the drop in Global Payout's long position.| Merck vs. Capricor Therapeutics | Merck vs. Soleno Therapeutics | Merck vs. Bio Path Holdings | Merck vs. Moleculin Biotech |
| Global Payout vs. Marchex | Global Payout vs. Snipp Interactive | Global Payout vs. Emerald Expositions Events |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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