Correlation Between Merck and 1290 Funds
Can any of the company-specific risk be diversified away by investing in both Merck and 1290 Funds 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 1290 Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and 1290 Funds , you can compare the effects of market volatilities on Merck and 1290 Funds 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 1290 Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and 1290 Funds.
Diversification Opportunities for Merck and 1290 Funds
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Merck and 1290 is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and 1290 Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 1290 Funds 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 1290 Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 1290 Funds has no effect on the direction of Merck i.e., Merck and 1290 Funds go up and down completely randomly.
Pair Corralation between Merck and 1290 Funds
Considering the 90-day investment horizon Merck Company is expected to under-perform the 1290 Funds. In addition to that, Merck is 1.55 times more volatile than 1290 Funds . It trades about -0.02 of its total potential returns per unit of risk. 1290 Funds is currently generating about 0.32 per unit of volatility. If you would invest 1,760 in 1290 Funds on September 1, 2024 and sell it today you would earn a total of 107.00 from holding 1290 Funds or generate 6.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Merck Company vs. 1290 Funds
Performance |
| Timeline |
| Merck Company |
| 1290 Funds |
Merck and 1290 Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and 1290 Funds
The main advantage of trading using opposite Merck and 1290 Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, 1290 Funds 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 1290 Funds will offset losses from the drop in 1290 Funds' long position.The idea behind Merck Company and 1290 Funds 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.| 1290 Funds vs. 1290 Funds | 1290 Funds vs. 1290 Essex Small | 1290 Funds vs. 1290 Funds | 1290 Funds vs. 1290 Smartbeta Equity |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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