Correlation Between Merck and CREDIT
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By analyzing existing cross correlation between Merck Company and CREDIT SUISSE AG, you can compare the effects of market volatilities on Merck and CREDIT 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 CREDIT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and CREDIT.
Diversification Opportunities for Merck and CREDIT
Very good diversification
The 3 months correlation between Merck and CREDIT is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and CREDIT SUISSE AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CREDIT SUISSE AG 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 CREDIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CREDIT SUISSE AG has no effect on the direction of Merck i.e., Merck and CREDIT go up and down completely randomly.
Pair Corralation between Merck and CREDIT
Considering the 90-day investment horizon Merck Company is expected to under-perform the CREDIT. But the stock apears to be less risky and, when comparing its historical volatility, Merck Company is 46.95 times less risky than CREDIT. The stock trades about 0.0 of its potential returns per unit of risk. The CREDIT SUISSE AG is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 8,596 in CREDIT SUISSE AG on September 2, 2024 and sell it today you would earn a total of 854.00 from holding CREDIT SUISSE AG or generate 9.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 79.3% |
| Values | Daily Returns |
Merck Company vs. CREDIT SUISSE AG
Performance |
| Timeline |
| Merck Company |
| CREDIT SUISSE AG |
Merck and CREDIT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and CREDIT
The main advantage of trading using opposite Merck and CREDIT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, CREDIT 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 CREDIT will offset losses from the drop in CREDIT's long position.The idea behind Merck Company and CREDIT SUISSE AG 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.| CREDIT vs. Cardinal Health | CREDIT vs. Kura Sushi USA | CREDIT vs. Sweetgreen | CREDIT vs. Ryman Hospitality Properties |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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