Correlation Between Merck and 548661EH6
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By analyzing existing cross correlation between Merck Company and LOW 375 01 APR 32, you can compare the effects of market volatilities on Merck and 548661EH6 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 548661EH6. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and 548661EH6.
Diversification Opportunities for Merck and 548661EH6
Poor diversification
The 3 months correlation between Merck and 548661EH6 is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and LOW 375 01 APR 32 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LOW 375 01 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 548661EH6. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LOW 375 01 has no effect on the direction of Merck i.e., Merck and 548661EH6 go up and down completely randomly.
Pair Corralation between Merck and 548661EH6
Considering the 90-day investment horizon Merck Company is expected to generate 2.05 times more return on investment than 548661EH6. However, Merck is 2.05 times more volatile than LOW 375 01 APR 32. It trades about 0.0 of its potential returns per unit of risk. LOW 375 01 APR 32 is currently generating about -0.02 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. LOW 375 01 APR 32
Performance |
| Timeline |
| Merck Company |
| LOW 375 01 |
Merck and 548661EH6 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and 548661EH6
The main advantage of trading using opposite Merck and 548661EH6 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, 548661EH6 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 548661EH6 will offset losses from the drop in 548661EH6's long position.The idea behind Merck Company and LOW 375 01 APR 32 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.| 548661EH6 vs. Sanyo Special Steel | 548661EH6 vs. Diamond Estates Wines | 548661EH6 vs. Ironveld Plc | 548661EH6 vs. Summit Environmental |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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