Correlation Between Merck and Quantified Market
Can any of the company-specific risk be diversified away by investing in both Merck and Quantified Market 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 Quantified Market into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Quantified Market Leaders, you can compare the effects of market volatilities on Merck and Quantified Market 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 Quantified Market. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Quantified Market.
Diversification Opportunities for Merck and Quantified Market
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Merck and Quantified is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Quantified Market Leaders in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quantified Market Leaders 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 Quantified Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quantified Market Leaders has no effect on the direction of Merck i.e., Merck and Quantified Market go up and down completely randomly.
Pair Corralation between Merck and Quantified Market
Considering the 90-day investment horizon Merck Company is expected to under-perform the Quantified Market. But the stock apears to be less risky and, when comparing its historical volatility, Merck Company is 1.28 times less risky than Quantified Market. The stock trades about -0.16 of its potential returns per unit of risk. The Quantified Market Leaders is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 1,100 in Quantified Market Leaders on August 24, 2024 and sell it today you would earn a total of 65.00 from holding Quantified Market Leaders or generate 5.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Merck Company vs. Quantified Market Leaders
Performance |
| Timeline |
| Merck Company |
| Quantified Market Leaders |
Merck and Quantified Market Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Quantified Market
The main advantage of trading using opposite Merck and Quantified Market positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Quantified Market 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 Quantified Market will offset losses from the drop in Quantified Market's long position.The idea behind Merck Company and Quantified Market Leaders pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Quantified Market vs. Ab All Market | Quantified Market vs. Western Asset Diversified | Quantified Market vs. Siit Emerging Markets | Quantified Market vs. Transamerica Emerging Markets |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
Other Complementary Tools
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital |