Correlation Between Merck and Snap One
Can any of the company-specific risk be diversified away by investing in both Merck and Snap One 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 Snap One into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Snap One Holdings, you can compare the effects of market volatilities on Merck and Snap One 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 Snap One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Snap One.
Diversification Opportunities for Merck and Snap One
Excellent diversification
The 3 months correlation between Merck and Snap is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Snap One Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Snap One Holdings 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 Snap One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Snap One Holdings has no effect on the direction of Merck i.e., Merck and Snap One go up and down completely randomly.
Pair Corralation between Merck and Snap One
If you would invest 1,075 in Snap One Holdings on August 24, 2024 and sell it today you would earn a total of 0.00 from holding Snap One Holdings or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 4.35% |
| Values | Daily Returns |
Merck Company vs. Snap One Holdings
Performance |
| Timeline |
| Merck Company |
| Snap One Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Merck and Snap One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Snap One
The main advantage of trading using opposite Merck and Snap One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Snap One 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 Snap One will offset losses from the drop in Snap One's long position.The idea behind Merck Company and Snap One Holdings 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.| Snap One vs. Climb Global Solutions | Snap One vs. Insight Enterprises | Snap One vs. ScanSource | Snap One vs. Synnex |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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