Correlation Between Merck and 502413BE6
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By analyzing existing cross correlation between Merck Company and L3 TECHNOLOGIES INC, you can compare the effects of market volatilities on Merck and 502413BE6 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 502413BE6. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and 502413BE6.
Diversification Opportunities for Merck and 502413BE6
Very good diversification
The 3 months correlation between Merck and 502413BE6 is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and L3 TECHNOLOGIES INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on L3 TECHNOLOGIES INC 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 502413BE6. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of L3 TECHNOLOGIES INC has no effect on the direction of Merck i.e., Merck and 502413BE6 go up and down completely randomly.
Pair Corralation between Merck and 502413BE6
Considering the 90-day investment horizon Merck Company is expected to generate 5.52 times more return on investment than 502413BE6. However, Merck is 5.52 times more volatile than L3 TECHNOLOGIES INC. It trades about -0.16 of its potential returns per unit of risk. L3 TECHNOLOGIES INC is currently generating about -1.14 per unit of risk. If you would invest 10,638 in Merck Company on August 24, 2024 and sell it today you would lose (514.00) from holding Merck Company or give up 4.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 13.04% |
| Values | Daily Returns |
Merck Company vs. L3 TECHNOLOGIES INC
Performance |
| Timeline |
| Merck Company |
| L3 TECHNOLOGIES INC |
Merck and 502413BE6 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and 502413BE6
The main advantage of trading using opposite Merck and 502413BE6 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, 502413BE6 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 502413BE6 will offset losses from the drop in 502413BE6's long position.The idea behind Merck Company and L3 TECHNOLOGIES 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.| 502413BE6 vs. The Coca Cola | 502413BE6 vs. JPMorgan Chase Co | 502413BE6 vs. Dupont De Nemours | 502413BE6 vs. Alcoa Corp |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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