Correlation Between Merck and NUSTAR
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By analyzing existing cross correlation between Merck Company and NUSTAR LOGISTICS L, you can compare the effects of market volatilities on Merck and NUSTAR 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 NUSTAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and NUSTAR.
Diversification Opportunities for Merck and NUSTAR
Poor diversification
The 3 months correlation between Merck and NUSTAR is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and NUSTAR LOGISTICS L in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NUSTAR LOGISTICS L 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 NUSTAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NUSTAR LOGISTICS L has no effect on the direction of Merck i.e., Merck and NUSTAR go up and down completely randomly.
Pair Corralation between Merck and NUSTAR
Considering the 90-day investment horizon Merck Company is expected to under-perform the NUSTAR. In addition to that, Merck is 1.67 times more volatile than NUSTAR LOGISTICS L. It trades about -0.11 of its total potential returns per unit of risk. NUSTAR LOGISTICS L is currently generating about -0.05 per unit of volatility. If you would invest 10,004 in NUSTAR LOGISTICS L on September 2, 2024 and sell it today you would lose (599.00) from holding NUSTAR LOGISTICS L or give up 5.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.62% |
| Values | Daily Returns |
Merck Company vs. NUSTAR LOGISTICS L
Performance |
| Timeline |
| Merck Company |
| NUSTAR LOGISTICS L |
Merck and NUSTAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and NUSTAR
The main advantage of trading using opposite Merck and NUSTAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, NUSTAR 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 NUSTAR will offset losses from the drop in NUSTAR's long position.The idea behind Merck Company and NUSTAR LOGISTICS L 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.| NUSTAR vs. Pentair PLC | NUSTAR vs. Meiwu Technology Co | NUSTAR vs. Cardinal Health | NUSTAR vs. Coupang LLC |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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