Correlation Between Merck and INTERNATIONAL
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By analyzing existing cross correlation between Merck Company and INTERNATIONAL PAPER 44, you can compare the effects of market volatilities on Merck and INTERNATIONAL 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 INTERNATIONAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and INTERNATIONAL.
Diversification Opportunities for Merck and INTERNATIONAL
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Merck and INTERNATIONAL is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and INTERNATIONAL PAPER 44 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTERNATIONAL PAPER 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 INTERNATIONAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTERNATIONAL PAPER has no effect on the direction of Merck i.e., Merck and INTERNATIONAL go up and down completely randomly.
Pair Corralation between Merck and INTERNATIONAL
Considering the 90-day investment horizon Merck Company is expected to generate 0.82 times more return on investment than INTERNATIONAL. However, Merck Company is 1.21 times less risky than INTERNATIONAL. It trades about -0.05 of its potential returns per unit of risk. INTERNATIONAL PAPER 44 is currently generating about -0.04 per unit of risk. If you would invest 11,851 in Merck Company on August 28, 2024 and sell it today you would lose (1,735) from holding Merck Company or give up 14.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 53.11% |
| Values | Daily Returns |
Merck Company vs. INTERNATIONAL PAPER 44
Performance |
| Timeline |
| Merck Company |
| INTERNATIONAL PAPER |
Merck and INTERNATIONAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and INTERNATIONAL
The main advantage of trading using opposite Merck and INTERNATIONAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, INTERNATIONAL 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 INTERNATIONAL will offset losses from the drop in INTERNATIONAL's long position.| Merck vs. Capricor Therapeutics | Merck vs. Soleno Therapeutics | Merck vs. Bio Path Holdings | Merck vs. Moleculin Biotech |
| INTERNATIONAL vs. Dana Inc | INTERNATIONAL vs. Li Auto | INTERNATIONAL vs. Universal Technical Institute | INTERNATIONAL vs. Afya |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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