Correlation Between Merck and HOLOGIC
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By analyzing existing cross correlation between Merck Company and HOLOGIC INC 325, you can compare the effects of market volatilities on Merck and HOLOGIC 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 HOLOGIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and HOLOGIC.
Diversification Opportunities for Merck and HOLOGIC
Poor diversification
The 3 months correlation between Merck and HOLOGIC is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and HOLOGIC INC 325 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HOLOGIC INC 325 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 HOLOGIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HOLOGIC INC 325 has no effect on the direction of Merck i.e., Merck and HOLOGIC go up and down completely randomly.
Pair Corralation between Merck and HOLOGIC
Considering the 90-day investment horizon Merck Company is expected to generate 1.01 times more return on investment than HOLOGIC. However, Merck is 1.01 times more volatile than HOLOGIC INC 325. It trades about 0.0 of its potential returns per unit of risk. HOLOGIC INC 325 is currently generating about -0.22 per unit of risk. If you would invest 10,188 in Merck Company on September 2, 2024 and sell it today you would lose (24.00) from holding Merck Company or give up 0.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 90.48% |
| Values | Daily Returns |
Merck Company vs. HOLOGIC INC 325
Performance |
| Timeline |
| Merck Company |
| HOLOGIC INC 325 |
Merck and HOLOGIC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and HOLOGIC
The main advantage of trading using opposite Merck and HOLOGIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, HOLOGIC 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 HOLOGIC will offset losses from the drop in HOLOGIC's long position.The idea behind Merck Company and HOLOGIC INC 325 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.| HOLOGIC vs. Diageo PLC ADR | HOLOGIC vs. Anheuser Busch Inbev | HOLOGIC vs. Universal | HOLOGIC vs. Albertsons Companies |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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