Correlation Between Merck and SPC Nickel
Can any of the company-specific risk be diversified away by investing in both Merck and SPC Nickel 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 SPC Nickel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and SPC Nickel Corp, you can compare the effects of market volatilities on Merck and SPC Nickel 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 SPC Nickel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and SPC Nickel.
Diversification Opportunities for Merck and SPC Nickel
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Merck and SPC is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and SPC Nickel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPC Nickel Corp 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 SPC Nickel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPC Nickel Corp has no effect on the direction of Merck i.e., Merck and SPC Nickel go up and down completely randomly.
Pair Corralation between Merck and SPC Nickel
Considering the 90-day investment horizon Merck Company is expected to generate 0.23 times more return on investment than SPC Nickel. However, Merck Company is 4.32 times less risky than SPC Nickel. It trades about 0.0 of its potential returns per unit of risk. SPC Nickel Corp is currently generating about -0.22 per unit of risk. If you would invest 10,187 in Merck Company on September 3, 2024 and sell it today you would lose (23.00) from holding Merck Company or give up 0.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Merck Company vs. SPC Nickel Corp
Performance |
| Timeline |
| Merck Company |
| SPC Nickel Corp |
Merck and SPC Nickel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and SPC Nickel
The main advantage of trading using opposite Merck and SPC Nickel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, SPC Nickel 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 SPC Nickel will offset losses from the drop in SPC Nickel's long position.| Merck vs. Pfizer Inc | Merck vs. Johnson Johnson | Merck vs. Highway Holdings Limited | Merck vs. QCR Holdings |
| SPC Nickel vs. Qubec Nickel Corp | SPC Nickel vs. IGO Limited | SPC Nickel vs. Avarone Metals | SPC Nickel vs. Adriatic Metals PLC |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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