Correlation Between Merck and Stelmine Canada
Can any of the company-specific risk be diversified away by investing in both Merck and Stelmine Canada 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 Stelmine Canada into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Stelmine Canada, you can compare the effects of market volatilities on Merck and Stelmine Canada 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 Stelmine Canada. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Stelmine Canada.
Diversification Opportunities for Merck and Stelmine Canada
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Merck and Stelmine is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Stelmine Canada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stelmine Canada 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 Stelmine Canada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stelmine Canada has no effect on the direction of Merck i.e., Merck and Stelmine Canada go up and down completely randomly.
Pair Corralation between Merck and Stelmine Canada
Considering the 90-day investment horizon Merck Company is expected to under-perform the Stelmine Canada. But the stock apears to be less risky and, when comparing its historical volatility, Merck Company is 8.17 times less risky than Stelmine Canada. The stock trades about 0.0 of its potential returns per unit of risk. The Stelmine Canada is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 1.21 in Stelmine Canada on September 3, 2024 and sell it today you would lose (0.13) from holding Stelmine Canada or give up 10.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merck Company vs. Stelmine Canada
Performance |
| Timeline |
| Merck Company |
| Stelmine Canada |
Merck and Stelmine Canada Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Stelmine Canada
The main advantage of trading using opposite Merck and Stelmine Canada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Stelmine Canada 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 Stelmine Canada will offset losses from the drop in Stelmine Canada's long position.| Merck vs. Pfizer Inc | Merck vs. Johnson Johnson | Merck vs. Highway Holdings Limited | Merck vs. QCR Holdings |
| Stelmine Canada vs. Fury Gold Mines | Stelmine Canada vs. Ivanhoe Mines | Stelmine Canada vs. Americas Silver Corp | Stelmine Canada vs. StrikePoint Gold |
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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