Correlation Between Merck and FIRST
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By analyzing existing cross correlation between Merck Company and FIRST AMERN FINL, you can compare the effects of market volatilities on Merck and FIRST 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 FIRST. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and FIRST.
Diversification Opportunities for Merck and FIRST
Average diversification
The 3 months correlation between Merck and FIRST is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and FIRST AMERN FINL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIRST AMERN FINL 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 FIRST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIRST AMERN FINL has no effect on the direction of Merck i.e., Merck and FIRST go up and down completely randomly.
Pair Corralation between Merck and FIRST
Considering the 90-day investment horizon Merck is expected to generate 1.87 times less return on investment than FIRST. In addition to that, Merck is 3.15 times more volatile than FIRST AMERN FINL. It trades about 0.0 of its total potential returns per unit of risk. FIRST AMERN FINL is currently generating about 0.01 per unit of volatility. If you would invest 9,857 in FIRST AMERN FINL on August 28, 2024 and sell it today you would earn a total of 71.00 from holding FIRST AMERN FINL or generate 0.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 72.53% |
| Values | Daily Returns |
Merck Company vs. FIRST AMERN FINL
Performance |
| Timeline |
| Merck Company |
| FIRST AMERN FINL |
Merck and FIRST Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and FIRST
The main advantage of trading using opposite Merck and FIRST positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, FIRST 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 FIRST will offset losses from the drop in FIRST's long position.| Merck vs. Capricor Therapeutics | Merck vs. Soleno Therapeutics | Merck vs. Bio Path Holdings | Merck vs. Moleculin Biotech |
| FIRST vs. AEP TEX INC | FIRST vs. US BANK NATIONAL | FIRST vs. Eat Beyond Global | FIRST vs. Charles Schwab 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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