Correlation Between Merck and 55303XAB1
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By analyzing existing cross correlation between Merck Company and MGM Growth Properties, you can compare the effects of market volatilities on Merck and 55303XAB1 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 55303XAB1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and 55303XAB1.
Diversification Opportunities for Merck and 55303XAB1
Very good diversification
The 3 months correlation between Merck and 55303XAB1 is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and MGM Growth Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGM Growth Properties 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 55303XAB1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MGM Growth Properties has no effect on the direction of Merck i.e., Merck and 55303XAB1 go up and down completely randomly.
Pair Corralation between Merck and 55303XAB1
Considering the 90-day investment horizon Merck Company is expected to generate 0.8 times more return on investment than 55303XAB1. However, Merck Company is 1.25 times less risky than 55303XAB1. It trades about -0.05 of its potential returns per unit of risk. MGM Growth Properties is currently generating about -0.12 per unit of risk. If you would invest 10,483 in Merck Company on August 31, 2024 and sell it today you would lose (171.00) from holding Merck Company or give up 1.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 36.36% |
| Values | Daily Returns |
Merck Company vs. MGM Growth Properties
Performance |
| Timeline |
| Merck Company |
| MGM Growth Properties |
Merck and 55303XAB1 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and 55303XAB1
The main advantage of trading using opposite Merck and 55303XAB1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, 55303XAB1 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 55303XAB1 will offset losses from the drop in 55303XAB1's long position.The idea behind Merck Company and MGM Growth Properties 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.| 55303XAB1 vs. Senmiao Technology | 55303XAB1 vs. Micron Technology | 55303XAB1 vs. ServiceNow | 55303XAB1 vs. Asure Software |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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