Correlation Between Merck and 36158FAD2
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By analyzing existing cross correlation between Merck Company and GE GLOBAL INS, you can compare the effects of market volatilities on Merck and 36158FAD2 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 36158FAD2. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and 36158FAD2.
Diversification Opportunities for Merck and 36158FAD2
Excellent diversification
The 3 months correlation between Merck and 36158FAD2 is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and GE GLOBAL INS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GE GLOBAL INS 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 36158FAD2. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GE GLOBAL INS has no effect on the direction of Merck i.e., Merck and 36158FAD2 go up and down completely randomly.
Pair Corralation between Merck and 36158FAD2
Considering the 90-day investment horizon Merck Company is expected to generate 0.55 times more return on investment than 36158FAD2. However, Merck Company is 1.81 times less risky than 36158FAD2. It trades about -0.05 of its potential returns per unit of risk. GE GLOBAL INS is currently generating about -0.33 per unit of risk. If you would invest 10,483 in Merck Company on August 31, 2024 and sell it today you would lose (171.00) from holding Merck Company or give up 1.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 22.73% |
| Values | Daily Returns |
Merck Company vs. GE GLOBAL INS
Performance |
| Timeline |
| Merck Company |
| GE GLOBAL INS |
Merck and 36158FAD2 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and 36158FAD2
The main advantage of trading using opposite Merck and 36158FAD2 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, 36158FAD2 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 36158FAD2 will offset losses from the drop in 36158FAD2's long position.The idea behind Merck Company and GE GLOBAL INS 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.| 36158FAD2 vs. AEP TEX INC | 36158FAD2 vs. US BANK NATIONAL | 36158FAD2 vs. American Express | 36158FAD2 vs. Chevron 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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