Correlation Between Merck and IShares Nasdaq
Can any of the company-specific risk be diversified away by investing in both Merck and IShares Nasdaq 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 IShares Nasdaq into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and iShares Nasdaq 100 ex, you can compare the effects of market volatilities on Merck and IShares Nasdaq 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 IShares Nasdaq. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and IShares Nasdaq.
Diversification Opportunities for Merck and IShares Nasdaq
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Merck and IShares is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and iShares Nasdaq 100 ex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Nasdaq 100 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 IShares Nasdaq. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Nasdaq 100 has no effect on the direction of Merck i.e., Merck and IShares Nasdaq go up and down completely randomly.
Pair Corralation between Merck and IShares Nasdaq
Considering the 90-day investment horizon Merck Company is expected to under-perform the IShares Nasdaq. In addition to that, Merck is 1.49 times more volatile than iShares Nasdaq 100 ex. It trades about -0.11 of its total potential returns per unit of risk. iShares Nasdaq 100 ex is currently generating about 0.16 per unit of volatility. If you would invest 2,483 in iShares Nasdaq 100 ex on September 1, 2024 and sell it today you would earn a total of 108.00 from holding iShares Nasdaq 100 ex or generate 4.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 21.43% |
| Values | Daily Returns |
Merck Company vs. iShares Nasdaq 100 ex
Performance |
| Timeline |
| Merck Company |
| iShares Nasdaq 100 |
Merck and IShares Nasdaq Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and IShares Nasdaq
The main advantage of trading using opposite Merck and IShares Nasdaq positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, IShares Nasdaq 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 IShares Nasdaq will offset losses from the drop in IShares Nasdaq's long position.The idea behind Merck Company and iShares Nasdaq 100 ex 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.| IShares Nasdaq vs. Vanguard Growth Index | IShares Nasdaq vs. iShares Russell 1000 | IShares Nasdaq vs. iShares SP 500 | IShares Nasdaq vs. iShares Core SP |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
Other Complementary Tools
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| CEOs Directory Screen CEOs from public companies around the world |