Correlation Between Merck and GENERAL
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By analyzing existing cross correlation between Merck Company and GENERAL ELEC CAP, you can compare the effects of market volatilities on Merck and GENERAL 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 GENERAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and GENERAL.
Diversification Opportunities for Merck and GENERAL
Very good diversification
The 3 months correlation between Merck and GENERAL is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and GENERAL ELEC CAP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GENERAL ELEC CAP 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 GENERAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GENERAL ELEC CAP has no effect on the direction of Merck i.e., Merck and GENERAL go up and down completely randomly.
Pair Corralation between Merck and GENERAL
Considering the 90-day investment horizon Merck is expected to generate 7.13 times less return on investment than GENERAL. But when comparing it to its historical volatility, Merck Company is 1.22 times less risky than GENERAL. It trades about 0.0 of its potential returns per unit of risk. GENERAL ELEC CAP is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 9,838 in GENERAL ELEC CAP on September 2, 2024 and sell it today you would earn a total of 415.00 from holding GENERAL ELEC CAP or generate 4.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 40.73% |
| Values | Daily Returns |
Merck Company vs. GENERAL ELEC CAP
Performance |
| Timeline |
| Merck Company |
| GENERAL ELEC CAP |
Merck and GENERAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and GENERAL
The main advantage of trading using opposite Merck and GENERAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, GENERAL 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 GENERAL will offset losses from the drop in GENERAL's long position.The idea behind Merck Company and GENERAL ELEC CAP 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.| GENERAL vs. Sabre Corpo | GENERAL vs. Papaya Growth Opportunity | GENERAL vs. Balchem | GENERAL 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 CEOs Directory module to screen CEOs from public companies around the world.
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