Correlation Between Merck and Return Stacked
Can any of the company-specific risk be diversified away by investing in both Merck and Return Stacked 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 Return Stacked into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Return Stacked Bonds, you can compare the effects of market volatilities on Merck and Return Stacked 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 Return Stacked. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Return Stacked.
Diversification Opportunities for Merck and Return Stacked
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Merck and Return is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Return Stacked Bonds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Return Stacked Bonds 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 Return Stacked. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Return Stacked Bonds has no effect on the direction of Merck i.e., Merck and Return Stacked go up and down completely randomly.
Pair Corralation between Merck and Return Stacked
Considering the 90-day investment horizon Merck Company is expected to generate 2.25 times more return on investment than Return Stacked. However, Merck is 2.25 times more volatile than Return Stacked Bonds. It trades about 0.0 of its potential returns per unit of risk. Return Stacked Bonds is currently generating about -0.17 per unit of risk. If you would invest 10,677 in Merck Company on September 13, 2024 and sell it today you would lose (702.00) from holding Merck Company or give up 6.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 16.19% |
| Values | Daily Returns |
Merck Company vs. Return Stacked Bonds
Performance |
| Timeline |
| Merck Company |
| Return Stacked Bonds |
Merck and Return Stacked Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Return Stacked
The main advantage of trading using opposite Merck and Return Stacked positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Return Stacked 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 Return Stacked will offset losses from the drop in Return Stacked's long position.The idea behind Merck Company and Return Stacked Bonds 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.| Return Stacked vs. SPDR Bloomberg Barclays | Return Stacked vs. SPDR SSGA Fixed | Return Stacked vs. SPDR DoubleLine Short | Return Stacked vs. SPDR Portfolio Corporate |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets |