Correlation Between Merck and 40434LAA3
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By analyzing existing cross correlation between Merck Company and HP INC, you can compare the effects of market volatilities on Merck and 40434LAA3 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 40434LAA3. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and 40434LAA3.
Diversification Opportunities for Merck and 40434LAA3
Very good diversification
The 3 months correlation between Merck and 40434LAA3 is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and HP INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 40434LAA3 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 40434LAA3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 40434LAA3 has no effect on the direction of Merck i.e., Merck and 40434LAA3 go up and down completely randomly.
Pair Corralation between Merck and 40434LAA3
Considering the 90-day investment horizon Merck Company is expected to generate 1.77 times more return on investment than 40434LAA3. However, Merck is 1.77 times more volatile than HP INC. It trades about -0.01 of its potential returns per unit of risk. HP INC is currently generating about -0.19 per unit of risk. If you would invest 9,917 in Merck Company on November 3, 2024 and sell it today you would lose (35.00) from holding Merck Company or give up 0.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Merck Company vs. HP INC
Performance |
| Timeline |
| Merck Company |
| 40434LAA3 |
Merck and 40434LAA3 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and 40434LAA3
The main advantage of trading using opposite Merck and 40434LAA3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, 40434LAA3 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 40434LAA3 will offset losses from the drop in 40434LAA3's long position.The idea behind Merck Company and HP INC 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.| 40434LAA3 vs. Global Crossing Airlines | 40434LAA3 vs. Volaris | 40434LAA3 vs. SkyWest | 40434LAA3 vs. United Airlines Holdings |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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