Correlation Between Merck and Saba Capital
Can any of the company-specific risk be diversified away by investing in both Merck and Saba Capital 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 Saba Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Saba Capital Income, you can compare the effects of market volatilities on Merck and Saba Capital 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 Saba Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Saba Capital.
Diversification Opportunities for Merck and Saba Capital
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Merck and Saba is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Saba Capital Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saba Capital Income 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 Saba Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saba Capital Income has no effect on the direction of Merck i.e., Merck and Saba Capital go up and down completely randomly.
Pair Corralation between Merck and Saba Capital
Considering the 90-day investment horizon Merck Company is expected to under-perform the Saba Capital. In addition to that, Merck is 2.31 times more volatile than Saba Capital Income. It trades about -0.17 of its total potential returns per unit of risk. Saba Capital Income is currently generating about 0.29 per unit of volatility. If you would invest 820.00 in Saba Capital Income on September 12, 2024 and sell it today you would earn a total of 85.00 from holding Saba Capital Income or generate 10.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merck Company vs. Saba Capital Income
Performance |
| Timeline |
| Merck Company |
| Saba Capital Income |
Merck and Saba Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Saba Capital
The main advantage of trading using opposite Merck and Saba Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Saba Capital 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 Saba Capital will offset losses from the drop in Saba Capital's long position.The idea behind Merck Company and Saba Capital Income 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.| Saba Capital vs. FT Vest Equity | Saba Capital vs. Zillow Group Class | Saba Capital vs. Northern Lights | Saba Capital vs. VanEck Vectors Moodys |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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