Correlation Between Merck and Sustainable Development
Can any of the company-specific risk be diversified away by investing in both Merck and Sustainable Development 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 Sustainable Development into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Sustainable Development Acquisition, you can compare the effects of market volatilities on Merck and Sustainable Development 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 Sustainable Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Sustainable Development.
Diversification Opportunities for Merck and Sustainable Development
-0.9 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Merck and Sustainable is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Sustainable Development Acquis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sustainable Development 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 Sustainable Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sustainable Development has no effect on the direction of Merck i.e., Merck and Sustainable Development go up and down completely randomly.
Pair Corralation between Merck and Sustainable Development
If you would invest 1,040 in Sustainable Development Acquisition on September 3, 2024 and sell it today you would earn a total of 0.00 from holding Sustainable Development Acquisition or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 5.0% |
| Values | Daily Returns |
Merck Company vs. Sustainable Development Acquis
Performance |
| Timeline |
| Merck Company |
| Sustainable Development |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Merck and Sustainable Development Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Sustainable Development
The main advantage of trading using opposite Merck and Sustainable Development positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Sustainable Development 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 Sustainable Development will offset losses from the drop in Sustainable Development's long position.| Merck vs. Pfizer Inc | Merck vs. Johnson Johnson | Merck vs. Highway Holdings Limited | Merck vs. QCR Holdings |
| Sustainable Development vs. Welsbach Technology Metals | Sustainable Development vs. Thunder Bridge Capital |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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