Correlation Between Merck and AFLAC
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By analyzing existing cross correlation between Merck Company and AFLAC INC 4, you can compare the effects of market volatilities on Merck and AFLAC 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 AFLAC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and AFLAC.
Diversification Opportunities for Merck and AFLAC
Modest diversification
The 3 months correlation between Merck and AFLAC is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and AFLAC INC 4 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AFLAC INC 4 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 AFLAC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AFLAC INC 4 has no effect on the direction of Merck i.e., Merck and AFLAC go up and down completely randomly.
Pair Corralation between Merck and AFLAC
Considering the 90-day investment horizon Merck Company is expected to under-perform the AFLAC. But the stock apears to be less risky and, when comparing its historical volatility, Merck Company is 1.27 times less risky than AFLAC. The stock trades about -0.16 of its potential returns per unit of risk. The AFLAC INC 4 is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 8,040 in AFLAC INC 4 on August 24, 2024 and sell it today you would earn a total of 363.00 from holding AFLAC INC 4 or generate 4.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 65.22% |
| Values | Daily Returns |
Merck Company vs. AFLAC INC 4
Performance |
| Timeline |
| Merck Company |
| AFLAC INC 4 |
Merck and AFLAC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and AFLAC
The main advantage of trading using opposite Merck and AFLAC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, AFLAC 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 AFLAC will offset losses from the drop in AFLAC's long position.The idea behind Merck Company and AFLAC INC 4 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.| AFLAC vs. Fortress Transp Infra | AFLAC vs. FTAI Aviation Ltd | AFLAC vs. Vestis | AFLAC vs. Lendlease Global Commercial |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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