Correlation Between Merck and ALEXANDRIA
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By analyzing existing cross correlation between Merck Company and ALEXANDRIA REAL ESTATE, you can compare the effects of market volatilities on Merck and ALEXANDRIA 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 ALEXANDRIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and ALEXANDRIA.
Diversification Opportunities for Merck and ALEXANDRIA
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Merck and ALEXANDRIA is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and ALEXANDRIA REAL ESTATE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALEXANDRIA REAL ESTATE 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 ALEXANDRIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALEXANDRIA REAL ESTATE has no effect on the direction of Merck i.e., Merck and ALEXANDRIA go up and down completely randomly.
Pair Corralation between Merck and ALEXANDRIA
Considering the 90-day investment horizon Merck Company is expected to under-perform the ALEXANDRIA. In addition to that, Merck is 6.15 times more volatile than ALEXANDRIA REAL ESTATE. It trades about -0.16 of its total potential returns per unit of risk. ALEXANDRIA REAL ESTATE is currently generating about 0.13 per unit of volatility. If you would invest 9,763 in ALEXANDRIA REAL ESTATE on November 29, 2024 and sell it today you would earn a total of 109.00 from holding ALEXANDRIA REAL ESTATE or generate 1.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Merck Company vs. ALEXANDRIA REAL ESTATE
Performance |
| Timeline |
| Merck Company |
| ALEXANDRIA REAL ESTATE |
Merck and ALEXANDRIA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and ALEXANDRIA
The main advantage of trading using opposite Merck and ALEXANDRIA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, ALEXANDRIA 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 ALEXANDRIA will offset losses from the drop in ALEXANDRIA's long position.The idea behind Merck Company and ALEXANDRIA REAL ESTATE 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.| ALEXANDRIA vs. Compania Cervecerias Unidas | ALEXANDRIA vs. Skechers USA | ALEXANDRIA vs. Weyco Group | ALEXANDRIA vs. Vita Coco |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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