Correlation Between Merck and MARKEL
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By analyzing existing cross correlation between Merck Company and MARKEL P 43, you can compare the effects of market volatilities on Merck and MARKEL 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 MARKEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and MARKEL.
Diversification Opportunities for Merck and MARKEL
Very good diversification
The 3 months correlation between Merck and MARKEL is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and MARKEL P 43 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MARKEL P 43 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 MARKEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MARKEL P 43 has no effect on the direction of Merck i.e., Merck and MARKEL go up and down completely randomly.
Pair Corralation between Merck and MARKEL
Considering the 90-day investment horizon Merck Company is expected to under-perform the MARKEL. In addition to that, Merck is 1.14 times more volatile than MARKEL P 43. It trades about -0.06 of its total potential returns per unit of risk. MARKEL P 43 is currently generating about 0.01 per unit of volatility. If you would invest 8,210 in MARKEL P 43 on September 1, 2024 and sell it today you would earn a total of 42.00 from holding MARKEL P 43 or generate 0.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 29.26% |
| Values | Daily Returns |
Merck Company vs. MARKEL P 43
Performance |
| Timeline |
| Merck Company |
| MARKEL P 43 |
Merck and MARKEL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and MARKEL
The main advantage of trading using opposite Merck and MARKEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, MARKEL 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 MARKEL will offset losses from the drop in MARKEL's long position.The idea behind Merck Company and MARKEL P 43 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.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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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