Correlation Between Merck and Strattner Financial
Can any of the company-specific risk be diversified away by investing in both Merck and Strattner Financial 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 Strattner Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Strattner Financial Group, you can compare the effects of market volatilities on Merck and Strattner Financial 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 Strattner Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Strattner Financial.
Diversification Opportunities for Merck and Strattner Financial
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Merck and Strattner is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Strattner Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strattner Financial 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 Strattner Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strattner Financial has no effect on the direction of Merck i.e., Merck and Strattner Financial go up and down completely randomly.
Pair Corralation between Merck and Strattner Financial
Considering the 90-day investment horizon Merck Company is expected to under-perform the Strattner Financial. But the stock apears to be less risky and, when comparing its historical volatility, Merck Company is 12.13 times less risky than Strattner Financial. The stock trades about -0.15 of its potential returns per unit of risk. The Strattner Financial Group is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 0.01 in Strattner Financial Group on September 12, 2024 and sell it today you would earn a total of 0.01 from holding Strattner Financial Group or generate 100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 97.56% |
| Values | Daily Returns |
Merck Company vs. Strattner Financial Group
Performance |
| Timeline |
| Merck Company |
| Strattner Financial |
Merck and Strattner Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Strattner Financial
The main advantage of trading using opposite Merck and Strattner Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Strattner Financial 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 Strattner Financial will offset losses from the drop in Strattner Financial's long position.| Merck vs. Victory Integrity Smallmid Cap | Merck vs. Hilton Worldwide Holdings | Merck vs. NVIDIA | Merck vs. JPMorgan Chase Co |
| Strattner Financial vs. POSCO Holdings | Strattner Financial vs. Schweizerische Nationalbank | Strattner Financial vs. Berkshire Hathaway | Strattner Financial vs. Berkshire Hathaway |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |