Correlation Between Merck and LOWES
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By analyzing existing cross correlation between Merck Company and LOWES INC 6875, you can compare the effects of market volatilities on Merck and LOWES 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 LOWES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and LOWES.
Diversification Opportunities for Merck and LOWES
Poor diversification
The 3 months correlation between Merck and LOWES is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and LOWES INC 6875 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LOWES INC 6875 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 LOWES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LOWES INC 6875 has no effect on the direction of Merck i.e., Merck and LOWES go up and down completely randomly.
Pair Corralation between Merck and LOWES
Considering the 90-day investment horizon Merck Company is expected to generate 2.47 times more return on investment than LOWES. However, Merck is 2.47 times more volatile than LOWES INC 6875. It trades about -0.04 of its potential returns per unit of risk. LOWES INC 6875 is currently generating about -0.19 per unit of risk. If you would invest 10,187 in Merck Company on September 4, 2024 and sell it today you would lose (126.00) from holding Merck Company or give up 1.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 90.48% |
| Values | Daily Returns |
Merck Company vs. LOWES INC 6875
Performance |
| Timeline |
| Merck Company |
| LOWES INC 6875 |
Merck and LOWES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and LOWES
The main advantage of trading using opposite Merck and LOWES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, LOWES 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 LOWES will offset losses from the drop in LOWES's long position.| Merck vs. Crinetics Pharmaceuticals | Merck vs. Enanta Pharmaceuticals | Merck vs. Amicus Therapeutics | Merck vs. Connect Biopharma Holdings |
| LOWES vs. Alaska Air Group | LOWES vs. Ryanair Holdings PLC | LOWES vs. Porvair plc | LOWES vs. Employers 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 CEOs Directory module to screen CEOs from public companies around the world.
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