Correlation Between Merck and QNB Corp
Can any of the company-specific risk be diversified away by investing in both Merck and QNB 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 QNB 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 QNB Corp, you can compare the effects of market volatilities on Merck and QNB 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 QNB Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and QNB Corp.
Diversification Opportunities for Merck and QNB Corp
Very good diversification
The 3 months correlation between Merck and QNB is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and QNB Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QNB 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 QNB Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QNB Corp has no effect on the direction of Merck i.e., Merck and QNB Corp go up and down completely randomly.
Pair Corralation between Merck and QNB Corp
Considering the 90-day investment horizon Merck Company is expected to under-perform the QNB Corp. In addition to that, Merck is 2.92 times more volatile than QNB Corp. It trades about -0.13 of its total potential returns per unit of risk. QNB Corp is currently generating about 0.01 per unit of volatility. If you would invest 3,396 in QNB Corp on November 27, 2024 and sell it today you would earn a total of 4.00 from holding QNB Corp or generate 0.12% 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. QNB Corp
Performance |
| Timeline |
| Merck Company |
| QNB Corp |
Merck and QNB Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and QNB Corp
The main advantage of trading using opposite Merck and QNB Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, QNB 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 QNB Corp will offset losses from the drop in QNB Corp's long position.The idea behind Merck Company and QNB Corp 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.| QNB Corp vs. Eastern Michigan Financial | QNB Corp vs. Commercial National Financial | QNB Corp vs. Mifflinburg Bancorp | QNB Corp vs. Apollo Bancorp |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
Other Complementary Tools
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. |