Correlation Between Merck and EXPEDIA
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By analyzing existing cross correlation between Merck Company and EXPEDIA INC, you can compare the effects of market volatilities on Merck and EXPEDIA 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 EXPEDIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and EXPEDIA.
Diversification Opportunities for Merck and EXPEDIA
Very poor diversification
The 3 months correlation between Merck and EXPEDIA is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and EXPEDIA INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EXPEDIA INC 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 EXPEDIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EXPEDIA INC has no effect on the direction of Merck i.e., Merck and EXPEDIA go up and down completely randomly.
Pair Corralation between Merck and EXPEDIA
Considering the 90-day investment horizon Merck Company is expected to generate 2.76 times more return on investment than EXPEDIA. However, Merck is 2.76 times more volatile than EXPEDIA INC. It trades about 0.01 of its potential returns per unit of risk. EXPEDIA INC is currently generating about 0.01 per unit of risk. If you would invest 10,120 in Merck Company on September 2, 2024 and sell it today you would earn a total of 44.00 from holding Merck Company or generate 0.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.19% |
| Values | Daily Returns |
Merck Company vs. EXPEDIA INC
Performance |
| Timeline |
| Merck Company |
| EXPEDIA INC |
Merck and EXPEDIA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and EXPEDIA
The main advantage of trading using opposite Merck and EXPEDIA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, EXPEDIA 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 EXPEDIA will offset losses from the drop in EXPEDIA's long position.The idea behind Merck Company and EXPEDIA INC 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.| EXPEDIA vs. Independence Realty Trust | EXPEDIA vs. Ecovyst | EXPEDIA vs. Balchem | EXPEDIA vs. Axalta Coating Systems |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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