Correlation Between Merck and 260543CR2
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By analyzing existing cross correlation between Merck Company and DOW CHEMICAL PANY, you can compare the effects of market volatilities on Merck and 260543CR2 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 260543CR2. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and 260543CR2.
Diversification Opportunities for Merck and 260543CR2
Good diversification
The 3 months correlation between Merck and 260543CR2 is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and DOW CHEMICAL PANY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DOW CHEMICAL PANY 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 260543CR2. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DOW CHEMICAL PANY has no effect on the direction of Merck i.e., Merck and 260543CR2 go up and down completely randomly.
Pair Corralation between Merck and 260543CR2
Considering the 90-day investment horizon Merck Company is expected to under-perform the 260543CR2. In addition to that, Merck is 1.09 times more volatile than DOW CHEMICAL PANY. It trades about -0.04 of its total potential returns per unit of risk. DOW CHEMICAL PANY is currently generating about 0.01 per unit of volatility. If you would invest 9,672 in DOW CHEMICAL PANY on January 19, 2025 and sell it today you would earn a total of 251.00 from holding DOW CHEMICAL PANY or generate 2.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 93.13% |
| Values | Daily Returns |
Merck Company vs. DOW CHEMICAL PANY
Performance |
| Timeline |
| Merck Company |
| DOW CHEMICAL PANY |
Merck and 260543CR2 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and 260543CR2
The main advantage of trading using opposite Merck and 260543CR2 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, 260543CR2 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 260543CR2 will offset losses from the drop in 260543CR2's long position.The idea behind Merck Company and DOW CHEMICAL PANY 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.| 260543CR2 vs. AEP TEX INC | 260543CR2 vs. KDDI Corp | 260543CR2 vs. Clever Leaves Holdings | 260543CR2 vs. Restaurant Brands International |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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