Correlation Between Merck and Ruths Hospitality
Can any of the company-specific risk be diversified away by investing in both Merck and Ruths Hospitality 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 Ruths Hospitality into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Ruths Hospitality Group, you can compare the effects of market volatilities on Merck and Ruths Hospitality 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 Ruths Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Ruths Hospitality.
Diversification Opportunities for Merck and Ruths Hospitality
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Merck and Ruths is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Ruths Hospitality Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ruths Hospitality 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 Ruths Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ruths Hospitality has no effect on the direction of Merck i.e., Merck and Ruths Hospitality go up and down completely randomly.
Pair Corralation between Merck and Ruths Hospitality
If you would invest 2,149 in Ruths Hospitality Group on August 28, 2024 and sell it today you would earn a total of 0.00 from holding Ruths Hospitality Group or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 4.76% |
| Values | Daily Returns |
Merck Company vs. Ruths Hospitality Group
Performance |
| Timeline |
| Merck Company |
| Ruths Hospitality |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Merck and Ruths Hospitality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Ruths Hospitality
The main advantage of trading using opposite Merck and Ruths Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Ruths Hospitality 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 Ruths Hospitality will offset losses from the drop in Ruths Hospitality's long position.| Merck vs. Capricor Therapeutics | Merck vs. Soleno Therapeutics | Merck vs. Bio Path Holdings | Merck vs. Moleculin Biotech |
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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