Correlation Between Merck and 53522KAB9
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By analyzing existing cross correlation between Merck Company and LIN 47 05 DEC 25, you can compare the effects of market volatilities on Merck and 53522KAB9 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 53522KAB9. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and 53522KAB9.
Diversification Opportunities for Merck and 53522KAB9
Poor diversification
The 3 months correlation between Merck and 53522KAB9 is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and LIN 47 05 DEC 25 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LIN 47 05 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 53522KAB9. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LIN 47 05 has no effect on the direction of Merck i.e., Merck and 53522KAB9 go up and down completely randomly.
Pair Corralation between Merck and 53522KAB9
Considering the 90-day investment horizon Merck Company is expected to generate 3.29 times more return on investment than 53522KAB9. However, Merck is 3.29 times more volatile than LIN 47 05 DEC 25. It trades about 0.0 of its potential returns per unit of risk. LIN 47 05 DEC 25 is currently generating about -0.1 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 | 95.24% |
| Values | Daily Returns |
Merck Company vs. LIN 47 05 DEC 25
Performance |
| Timeline |
| Merck Company |
| LIN 47 05 |
Merck and 53522KAB9 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and 53522KAB9
The main advantage of trading using opposite Merck and 53522KAB9 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, 53522KAB9 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 53522KAB9 will offset losses from the drop in 53522KAB9's long position.The idea behind Merck Company and LIN 47 05 DEC 25 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.| 53522KAB9 vs. Cincinnati Financial | 53522KAB9 vs. Harmony Gold Mining | 53522KAB9 vs. Summa Silver Corp | 53522KAB9 vs. Cleantech Power 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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