Correlation Between Merck and KILROY
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By analyzing existing cross correlation between Merck Company and KILROY RLTY L, you can compare the effects of market volatilities on Merck and KILROY 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 KILROY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and KILROY.
Diversification Opportunities for Merck and KILROY
Very weak diversification
The 3 months correlation between Merck and KILROY is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and KILROY RLTY L in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KILROY RLTY L 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 KILROY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KILROY RLTY L has no effect on the direction of Merck i.e., Merck and KILROY go up and down completely randomly.
Pair Corralation between Merck and KILROY
Considering the 90-day investment horizon Merck Company is expected to under-perform the KILROY. In addition to that, Merck is 2.65 times more volatile than KILROY RLTY L. It trades about 0.0 of its total potential returns per unit of risk. KILROY RLTY L is currently generating about 0.03 per unit of volatility. If you would invest 9,227 in KILROY RLTY L on August 31, 2024 and sell it today you would earn a total of 348.00 from holding KILROY RLTY L or generate 3.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 90.91% |
| Values | Daily Returns |
Merck Company vs. KILROY RLTY L
Performance |
| Timeline |
| Merck Company |
| KILROY RLTY L |
Merck and KILROY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and KILROY
The main advantage of trading using opposite Merck and KILROY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, KILROY 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 KILROY will offset losses from the drop in KILROY's long position.The idea behind Merck Company and KILROY RLTY L 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.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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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