Correlation Between Merck and 00206RLV2
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By analyzing existing cross correlation between Merck Company and T 365 15 SEP 59, you can compare the effects of market volatilities on Merck and 00206RLV2 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 00206RLV2. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and 00206RLV2.
Diversification Opportunities for Merck and 00206RLV2
Very poor diversification
The 3 months correlation between Merck and 00206RLV2 is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and T 365 15 SEP 59 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 00206RLV2 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 00206RLV2. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 00206RLV2 has no effect on the direction of Merck i.e., Merck and 00206RLV2 go up and down completely randomly.
Pair Corralation between Merck and 00206RLV2
Considering the 90-day investment horizon Merck Company is expected to generate 0.81 times more return on investment than 00206RLV2. However, Merck Company is 1.24 times less risky than 00206RLV2. It trades about 0.0 of its potential returns per unit of risk. T 365 15 SEP 59 is currently generating about 0.0 per unit of risk. If you would invest 10,536 in Merck Company on August 31, 2024 and sell it today you would lose (372.00) from holding Merck Company or give up 3.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.4% |
| Values | Daily Returns |
Merck Company vs. T 365 15 SEP 59
Performance |
| Timeline |
| Merck Company |
| 00206RLV2 |
Merck and 00206RLV2 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and 00206RLV2
The main advantage of trading using opposite Merck and 00206RLV2 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, 00206RLV2 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 00206RLV2 will offset losses from the drop in 00206RLV2's long position.The idea behind Merck Company and T 365 15 SEP 59 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.| 00206RLV2 vs. ATT Inc | 00206RLV2 vs. Home Depot | 00206RLV2 vs. Cisco Systems | 00206RLV2 vs. Dupont De Nemours |
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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