Correlation Between Merck and 345397ZR7
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By analyzing existing cross correlation between Merck Company and Ford Motor Credit, you can compare the effects of market volatilities on Merck and 345397ZR7 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 345397ZR7. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and 345397ZR7.
Diversification Opportunities for Merck and 345397ZR7
Poor diversification
The 3 months correlation between Merck and 345397ZR7 is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Ford Motor Credit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ford Motor Credit 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 345397ZR7. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ford Motor Credit has no effect on the direction of Merck i.e., Merck and 345397ZR7 go up and down completely randomly.
Pair Corralation between Merck and 345397ZR7
Considering the 90-day investment horizon Merck Company is expected to under-perform the 345397ZR7. But the stock apears to be less risky and, when comparing its historical volatility, Merck Company is 41.06 times less risky than 345397ZR7. The stock trades about -0.01 of its potential returns per unit of risk. The Ford Motor Credit is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 9,253 in Ford Motor Credit on August 31, 2024 and sell it today you would lose (228.00) from holding Ford Motor Credit or give up 2.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.24% |
| Values | Daily Returns |
Merck Company vs. Ford Motor Credit
Performance |
| Timeline |
| Merck Company |
| Ford Motor Credit |
Merck and 345397ZR7 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and 345397ZR7
The main advantage of trading using opposite Merck and 345397ZR7 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, 345397ZR7 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 345397ZR7 will offset losses from the drop in 345397ZR7's long position.The idea behind Merck Company and Ford Motor Credit 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.| 345397ZR7 vs. WiMi Hologram Cloud | 345397ZR7 vs. Asbury Automotive Group | 345397ZR7 vs. Cimpress NV | 345397ZR7 vs. WPP PLC ADR |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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