Correlation Between Merck and EQUIFAX
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By analyzing existing cross correlation between Merck Company and EQUIFAX INC 7, you can compare the effects of market volatilities on Merck and EQUIFAX 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 EQUIFAX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and EQUIFAX.
Diversification Opportunities for Merck and EQUIFAX
Significant diversification
The 3 months correlation between Merck and EQUIFAX is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and EQUIFAX INC 7 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EQUIFAX INC 7 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 EQUIFAX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EQUIFAX INC 7 has no effect on the direction of Merck i.e., Merck and EQUIFAX go up and down completely randomly.
Pair Corralation between Merck and EQUIFAX
Considering the 90-day investment horizon Merck Company is expected to under-perform the EQUIFAX. But the stock apears to be less risky and, when comparing its historical volatility, Merck Company is 1.33 times less risky than EQUIFAX. The stock trades about -0.16 of its potential returns per unit of risk. The EQUIFAX INC 7 is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 11,211 in EQUIFAX INC 7 on August 24, 2024 and sell it today you would lose (311.00) from holding EQUIFAX INC 7 or give up 2.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 60.87% |
| Values | Daily Returns |
Merck Company vs. EQUIFAX INC 7
Performance |
| Timeline |
| Merck Company |
| EQUIFAX INC 7 |
Merck and EQUIFAX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and EQUIFAX
The main advantage of trading using opposite Merck and EQUIFAX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, EQUIFAX 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 EQUIFAX will offset losses from the drop in EQUIFAX's long position.The idea behind Merck Company and EQUIFAX INC 7 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.| EQUIFAX vs. Valens | EQUIFAX vs. MACOM Technology Solutions | EQUIFAX vs. Analog Devices | EQUIFAX vs. Artisan Partners Asset |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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