Correlation Between Merck and Quaint Oak
Can any of the company-specific risk be diversified away by investing in both Merck and Quaint Oak 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 Quaint Oak into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Quaint Oak Bancorp, you can compare the effects of market volatilities on Merck and Quaint Oak 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 Quaint Oak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Quaint Oak.
Diversification Opportunities for Merck and Quaint Oak
-0.92 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Merck and Quaint is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Quaint Oak Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quaint Oak Bancorp 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 Quaint Oak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quaint Oak Bancorp has no effect on the direction of Merck i.e., Merck and Quaint Oak go up and down completely randomly.
Pair Corralation between Merck and Quaint Oak
Considering the 90-day investment horizon Merck Company is expected to under-perform the Quaint Oak. In addition to that, Merck is 1.66 times more volatile than Quaint Oak Bancorp. It trades about -0.03 of its total potential returns per unit of risk. Quaint Oak Bancorp is currently generating about 0.17 per unit of volatility. If you would invest 1,075 in Quaint Oak Bancorp on August 29, 2024 and sell it today you would earn a total of 30.00 from holding Quaint Oak Bancorp or generate 2.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 91.3% |
| Values | Daily Returns |
Merck Company vs. Quaint Oak Bancorp
Performance |
| Timeline |
| Merck Company |
| Quaint Oak Bancorp |
Merck and Quaint Oak Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Quaint Oak
The main advantage of trading using opposite Merck and Quaint Oak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Quaint Oak 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 Quaint Oak will offset losses from the drop in Quaint Oak's long position.| Merck vs. Pharvaris BV | Merck vs. Brinker International | Merck vs. Alcoa Corp | Merck vs. Direxion Daily FTSE |
| Quaint Oak vs. Home Federal Bancorp | Quaint Oak vs. Community West Bancshares | Quaint Oak vs. Magyar Bancorp | Quaint Oak vs. IF 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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