Correlation Between Merck and INGEVITY
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By analyzing existing cross correlation between Merck Company and INGEVITY P 3875, you can compare the effects of market volatilities on Merck and INGEVITY 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 INGEVITY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and INGEVITY.
Diversification Opportunities for Merck and INGEVITY
Poor diversification
The 3 months correlation between Merck and INGEVITY is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and INGEVITY P 3875 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INGEVITY P 3875 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 INGEVITY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INGEVITY P 3875 has no effect on the direction of Merck i.e., Merck and INGEVITY go up and down completely randomly.
Pair Corralation between Merck and INGEVITY
Considering the 90-day investment horizon Merck Company is expected to under-perform the INGEVITY. But the stock apears to be less risky and, when comparing its historical volatility, Merck Company is 38.33 times less risky than INGEVITY. The stock trades about 0.0 of its potential returns per unit of risk. The INGEVITY P 3875 is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 8,574 in INGEVITY P 3875 on August 24, 2024 and sell it today you would lose (43.00) from holding INGEVITY P 3875 or give up 0.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 88.91% |
| Values | Daily Returns |
Merck Company vs. INGEVITY P 3875
Performance |
| Timeline |
| Merck Company |
| INGEVITY P 3875 |
Merck and INGEVITY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and INGEVITY
The main advantage of trading using opposite Merck and INGEVITY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, INGEVITY 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 INGEVITY will offset losses from the drop in INGEVITY's long position.The idea behind Merck Company and INGEVITY P 3875 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.| INGEVITY vs. AEP TEX INC | INGEVITY vs. US BANK NATIONAL | INGEVITY vs. Omega Healthcare Investors | INGEVITY vs. Zoom Video Communications |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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