Correlation Between Merck and Ridgeworth Ceredex
Can any of the company-specific risk be diversified away by investing in both Merck and Ridgeworth Ceredex 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 Ridgeworth Ceredex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Ridgeworth Ceredex Mid Cap, you can compare the effects of market volatilities on Merck and Ridgeworth Ceredex 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 Ridgeworth Ceredex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Ridgeworth Ceredex.
Diversification Opportunities for Merck and Ridgeworth Ceredex
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Merck and Ridgeworth is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Ridgeworth Ceredex Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ridgeworth Ceredex Mid 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 Ridgeworth Ceredex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ridgeworth Ceredex Mid has no effect on the direction of Merck i.e., Merck and Ridgeworth Ceredex go up and down completely randomly.
Pair Corralation between Merck and Ridgeworth Ceredex
Considering the 90-day investment horizon Merck Company is expected to under-perform the Ridgeworth Ceredex. In addition to that, Merck is 1.16 times more volatile than Ridgeworth Ceredex Mid Cap. It trades about -0.03 of its total potential returns per unit of risk. Ridgeworth Ceredex Mid Cap is currently generating about 0.19 per unit of volatility. If you would invest 1,318 in Ridgeworth Ceredex Mid Cap on August 29, 2024 and sell it today you would earn a total of 67.00 from holding Ridgeworth Ceredex Mid Cap or generate 5.08% 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. Ridgeworth Ceredex Mid Cap
Performance |
| Timeline |
| Merck Company |
| Ridgeworth Ceredex Mid |
Merck and Ridgeworth Ceredex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Ridgeworth Ceredex
The main advantage of trading using opposite Merck and Ridgeworth Ceredex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Ridgeworth Ceredex 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 Ridgeworth Ceredex will offset losses from the drop in Ridgeworth Ceredex's long position.| Merck vs. Pharvaris BV | Merck vs. Brinker International | Merck vs. Alcoa Corp | Merck vs. Direxion Daily FTSE |
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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