Correlation Between Merck and Thunderstruck Resources
Can any of the company-specific risk be diversified away by investing in both Merck and Thunderstruck Resources 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 Thunderstruck Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Thunderstruck Resources, you can compare the effects of market volatilities on Merck and Thunderstruck Resources 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 Thunderstruck Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Thunderstruck Resources.
Diversification Opportunities for Merck and Thunderstruck Resources
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Merck and Thunderstruck is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Thunderstruck Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thunderstruck Resources 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 Thunderstruck Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thunderstruck Resources has no effect on the direction of Merck i.e., Merck and Thunderstruck Resources go up and down completely randomly.
Pair Corralation between Merck and Thunderstruck Resources
Considering the 90-day investment horizon Merck Company is expected to under-perform the Thunderstruck Resources. But the stock apears to be less risky and, when comparing its historical volatility, Merck Company is 17.72 times less risky than Thunderstruck Resources. The stock trades about 0.0 of its potential returns per unit of risk. The Thunderstruck Resources is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 5.00 in Thunderstruck Resources on September 3, 2024 and sell it today you would lose (1.25) from holding Thunderstruck Resources or give up 25.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Merck Company vs. Thunderstruck Resources
Performance |
| Timeline |
| Merck Company |
| Thunderstruck Resources |
Merck and Thunderstruck Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Thunderstruck Resources
The main advantage of trading using opposite Merck and Thunderstruck Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Thunderstruck Resources 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 Thunderstruck Resources will offset losses from the drop in Thunderstruck Resources' long position.| Merck vs. Pfizer Inc | Merck vs. Johnson Johnson | Merck vs. Highway Holdings Limited | Merck vs. QCR Holdings |
| Thunderstruck Resources vs. Aston Minerals | Thunderstruck Resources vs. Tarku Resources | Thunderstruck Resources vs. Eminent Gold Corp | Thunderstruck Resources vs. Murchison Minerals |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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