Correlation Between Merck and DIGITAL
Specify exactly 2 symbols:
By analyzing existing cross correlation between Merck Company and DIGITAL RLTY TR, you can compare the effects of market volatilities on Merck and DIGITAL 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 DIGITAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and DIGITAL.
Diversification Opportunities for Merck and DIGITAL
Poor diversification
The 3 months correlation between Merck and DIGITAL is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and DIGITAL RLTY TR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DIGITAL RLTY TR 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 DIGITAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DIGITAL RLTY TR has no effect on the direction of Merck i.e., Merck and DIGITAL go up and down completely randomly.
Pair Corralation between Merck and DIGITAL
Considering the 90-day investment horizon Merck Company is expected to generate 2.11 times more return on investment than DIGITAL. However, Merck is 2.11 times more volatile than DIGITAL RLTY TR. It trades about -0.02 of its potential returns per unit of risk. DIGITAL RLTY TR is currently generating about -0.19 per unit of risk. If you would invest 10,232 in Merck Company on September 1, 2024 and sell it today you would lose (68.00) from holding Merck Company or give up 0.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merck Company vs. DIGITAL RLTY TR
Performance |
| Timeline |
| Merck Company |
| DIGITAL RLTY TR |
Merck and DIGITAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and DIGITAL
The main advantage of trading using opposite Merck and DIGITAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, DIGITAL 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 DIGITAL will offset losses from the drop in DIGITAL's long position.The idea behind Merck Company and DIGITAL RLTY TR 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.| DIGITAL vs. AEP TEX INC | DIGITAL vs. US BANK NATIONAL | DIGITAL vs. American Express | DIGITAL vs. Chevron Corp |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
Other Complementary Tools
| Transaction History View history of all your transactions and understand their impact on performance | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals |