Correlation Between Merck and EXPNLN
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By analyzing existing cross correlation between Merck Company and EXPNLN 425 01 FEB 29, you can compare the effects of market volatilities on Merck and EXPNLN 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 EXPNLN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and EXPNLN.
Diversification Opportunities for Merck and EXPNLN
Excellent diversification
The 3 months correlation between Merck and EXPNLN is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and EXPNLN 425 01 FEB 29 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EXPNLN 425 01 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 EXPNLN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EXPNLN 425 01 has no effect on the direction of Merck i.e., Merck and EXPNLN go up and down completely randomly.
Pair Corralation between Merck and EXPNLN
Considering the 90-day investment horizon Merck Company is expected to under-perform the EXPNLN. In addition to that, Merck is 5.74 times more volatile than EXPNLN 425 01 FEB 29. It trades about 0.0 of its total potential returns per unit of risk. EXPNLN 425 01 FEB 29 is currently generating about 0.26 per unit of volatility. If you would invest 9,772 in EXPNLN 425 01 FEB 29 on September 2, 2024 and sell it today you would earn a total of 51.00 from holding EXPNLN 425 01 FEB 29 or generate 0.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 42.86% |
| Values | Daily Returns |
Merck Company vs. EXPNLN 425 01 FEB 29
Performance |
| Timeline |
| Merck Company |
| EXPNLN 425 01 |
Merck and EXPNLN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and EXPNLN
The main advantage of trading using opposite Merck and EXPNLN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, EXPNLN 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 EXPNLN will offset losses from the drop in EXPNLN's long position.The idea behind Merck Company and EXPNLN 425 01 FEB 29 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.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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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