Correlation Between Merck and LOWES
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By analyzing existing cross correlation between Merck Company and LOWES INC 665, 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 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and LOWES INC 665 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LOWES INC 665 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 665 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 under-perform the LOWES. But the stock apears to be less risky and, when comparing its historical volatility, Merck Company is 1.51 times less risky than LOWES. The stock trades about -0.01 of its potential returns per unit of risk. The LOWES INC 665 is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 10,791 in LOWES INC 665 on September 12, 2024 and sell it today you would earn a total of 235.00 from holding LOWES INC 665 or generate 2.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 62.73% |
| Values | Daily Returns |
Merck Company vs. LOWES INC 665
Performance |
| Timeline |
| Merck Company |
| LOWES INC 665 |
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. Victory Integrity Smallmid Cap | Merck vs. Hilton Worldwide Holdings | Merck vs. NVIDIA | Merck vs. JPMorgan Chase Co |
| LOWES vs. AEP TEX INC | LOWES vs. US BANK NATIONAL | LOWES vs. Applied Blockchain | LOWES vs. BigBearai 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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