Correlation Between Merck and Supernova Energy
Can any of the company-specific risk be diversified away by investing in both Merck and Supernova Energy 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 Supernova Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Supernova Energy, you can compare the effects of market volatilities on Merck and Supernova Energy 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 Supernova Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Supernova Energy.
Diversification Opportunities for Merck and Supernova Energy
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Merck and Supernova is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Supernova Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Supernova Energy 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 Supernova Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Supernova Energy has no effect on the direction of Merck i.e., Merck and Supernova Energy go up and down completely randomly.
Pair Corralation between Merck and Supernova Energy
If you would invest 0.03 in Supernova Energy on September 3, 2024 and sell it today you would earn a total of 0.00 from holding Supernova Energy or generate 0.0% 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. Supernova Energy
Performance |
| Timeline |
| Merck Company |
| Supernova Energy |
Merck and Supernova Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Supernova Energy
The main advantage of trading using opposite Merck and Supernova Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Supernova Energy 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 Supernova Energy will offset losses from the drop in Supernova Energy's long position.| Merck vs. Pfizer Inc | Merck vs. Johnson Johnson | Merck vs. Highway Holdings Limited | Merck vs. QCR Holdings |
| Supernova Energy vs. Cross Timbers Royalty | Supernova Energy vs. Kimbell Royalty Partners | Supernova Energy vs. Black Stone Minerals | Supernova Energy vs. VOC Energy Trust |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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