Correlation Between Merck and GOODYEAR
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By analyzing existing cross correlation between Merck Company and GOODYEAR TIRE RUBR, you can compare the effects of market volatilities on Merck and GOODYEAR 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 GOODYEAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and GOODYEAR.
Diversification Opportunities for Merck and GOODYEAR
Good diversification
The 3 months correlation between Merck and GOODYEAR is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and GOODYEAR TIRE RUBR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GOODYEAR TIRE RUBR 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 GOODYEAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GOODYEAR TIRE RUBR has no effect on the direction of Merck i.e., Merck and GOODYEAR go up and down completely randomly.
Pair Corralation between Merck and GOODYEAR
Considering the 90-day investment horizon Merck Company is expected to under-perform the GOODYEAR. In addition to that, Merck is 2.55 times more volatile than GOODYEAR TIRE RUBR. It trades about -0.25 of its total potential returns per unit of risk. GOODYEAR TIRE RUBR is currently generating about 0.01 per unit of volatility. If you would invest 10,063 in GOODYEAR TIRE RUBR on November 9, 2024 and sell it today you would earn a total of 9.00 from holding GOODYEAR TIRE RUBR or generate 0.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Merck Company vs. GOODYEAR TIRE RUBR
Performance |
| Timeline |
| Merck Company |
| GOODYEAR TIRE RUBR |
Merck and GOODYEAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and GOODYEAR
The main advantage of trading using opposite Merck and GOODYEAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, GOODYEAR 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 GOODYEAR will offset losses from the drop in GOODYEAR's long position.The idea behind Merck Company and GOODYEAR TIRE RUBR 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.| GOODYEAR vs. Motorsport Gaming Us | GOODYEAR vs. Silicon Gaming | GOODYEAR vs. Gamehost | GOODYEAR vs. Games Workshop Group |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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