Correlation Between Merck and LOCKHEED
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By analyzing existing cross correlation between Merck Company and LOCKHEED MARTIN P, you can compare the effects of market volatilities on Merck and LOCKHEED 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 LOCKHEED. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and LOCKHEED.
Diversification Opportunities for Merck and LOCKHEED
Very poor diversification
The 3 months correlation between Merck and LOCKHEED is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and LOCKHEED MARTIN P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LOCKHEED MARTIN P 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 LOCKHEED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LOCKHEED MARTIN P has no effect on the direction of Merck i.e., Merck and LOCKHEED go up and down completely randomly.
Pair Corralation between Merck and LOCKHEED
Considering the 90-day investment horizon Merck Company is expected to under-perform the LOCKHEED. In addition to that, Merck is 1.09 times more volatile than LOCKHEED MARTIN P. It trades about -0.16 of its total potential returns per unit of risk. LOCKHEED MARTIN P is currently generating about 0.05 per unit of volatility. If you would invest 8,632 in LOCKHEED MARTIN P on August 24, 2024 and sell it today you would earn a total of 105.00 from holding LOCKHEED MARTIN P or generate 1.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 91.3% |
| Values | Daily Returns |
Merck Company vs. LOCKHEED MARTIN P
Performance |
| Timeline |
| Merck Company |
| LOCKHEED MARTIN P |
Merck and LOCKHEED Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and LOCKHEED
The main advantage of trading using opposite Merck and LOCKHEED positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, LOCKHEED 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 LOCKHEED will offset losses from the drop in LOCKHEED's long position.The idea behind Merck Company and LOCKHEED MARTIN P 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.| LOCKHEED vs. ASML Holding NV | LOCKHEED vs. Getty Realty | LOCKHEED vs. Meiwu Technology Co | LOCKHEED vs. National Vision Holdings |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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