Correlation Between Merck and Rover
Can any of the company-specific risk be diversified away by investing in both Merck and Rover 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 Rover into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Rover Group, you can compare the effects of market volatilities on Merck and Rover 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 Rover. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Rover.
Diversification Opportunities for Merck and Rover
Pay attention - limited upside
The 3 months correlation between Merck and Rover is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Rover Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rover Group 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 Rover. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rover Group has no effect on the direction of Merck i.e., Merck and Rover go up and down completely randomly.
Pair Corralation between Merck and Rover
If you would invest 520.00 in Rover Group on August 28, 2024 and sell it today you would earn a total of 0.00 from holding Rover Group or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 2.33% |
| Values | Daily Returns |
Merck Company vs. Rover Group
Performance |
| Timeline |
| Merck Company |
| Rover Group |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Merck and Rover Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Rover
The main advantage of trading using opposite Merck and Rover positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Rover 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 Rover will offset losses from the drop in Rover's long position.| Merck vs. Capricor Therapeutics | Merck vs. Soleno Therapeutics | Merck vs. Bio Path Holdings | Merck vs. Moleculin Biotech |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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