Correlation Between Merck and IShares 0
Can any of the company-specific risk be diversified away by investing in both Merck and IShares 0 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 IShares 0 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and iShares 0 5 Year, you can compare the effects of market volatilities on Merck and IShares 0 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 IShares 0. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and IShares 0.
Diversification Opportunities for Merck and IShares 0
Excellent diversification
The 3 months correlation between Merck and IShares is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and iShares 0 5 Year in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares 0 5 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 IShares 0. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares 0 5 has no effect on the direction of Merck i.e., Merck and IShares 0 go up and down completely randomly.
Pair Corralation between Merck and IShares 0
Considering the 90-day investment horizon Merck Company is expected to under-perform the IShares 0. In addition to that, Merck is 7.2 times more volatile than iShares 0 5 Year. It trades about -0.22 of its total potential returns per unit of risk. iShares 0 5 Year is currently generating about 0.21 per unit of volatility. If you would invest 4,270 in iShares 0 5 Year on August 24, 2024 and sell it today you would earn a total of 35.00 from holding iShares 0 5 Year or generate 0.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merck Company vs. iShares 0 5 Year
Performance |
| Timeline |
| Merck Company |
| iShares 0 5 |
Merck and IShares 0 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and IShares 0
The main advantage of trading using opposite Merck and IShares 0 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, IShares 0 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 IShares 0 will offset losses from the drop in IShares 0's long position.| Merck vs. Johnson Johnson | Merck vs. Small Cap Core | Merck vs. Freedom Holding Corp | Merck vs. Gfl Environmental Holdings |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios |