Correlation Between Merck and OCCIDENTAL
Specify exactly 2 symbols:
By analyzing existing cross correlation between Merck Company and OCCIDENTAL PETE P, you can compare the effects of market volatilities on Merck and OCCIDENTAL 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 OCCIDENTAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and OCCIDENTAL.
Diversification Opportunities for Merck and OCCIDENTAL
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Merck and OCCIDENTAL is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and OCCIDENTAL PETE P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OCCIDENTAL PETE P 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 OCCIDENTAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OCCIDENTAL PETE P has no effect on the direction of Merck i.e., Merck and OCCIDENTAL go up and down completely randomly.
Pair Corralation between Merck and OCCIDENTAL
Considering the 90-day investment horizon Merck Company is expected to under-perform the OCCIDENTAL. But the stock apears to be less risky and, when comparing its historical volatility, Merck Company is 1.03 times less risky than OCCIDENTAL. The stock trades about -0.11 of its potential returns per unit of risk. The OCCIDENTAL PETE P is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 7,844 in OCCIDENTAL PETE P on August 31, 2024 and sell it today you would earn a total of 102.00 from holding OCCIDENTAL PETE P or generate 1.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 74.8% |
| Values | Daily Returns |
Merck Company vs. OCCIDENTAL PETE P
Performance |
| Timeline |
| Merck Company |
| OCCIDENTAL PETE P |
Merck and OCCIDENTAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and OCCIDENTAL
The main advantage of trading using opposite Merck and OCCIDENTAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, OCCIDENTAL 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 OCCIDENTAL will offset losses from the drop in OCCIDENTAL's long position.The idea behind Merck Company and OCCIDENTAL PETE P 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.| OCCIDENTAL vs. AEP TEX INC | OCCIDENTAL vs. US BANK NATIONAL | OCCIDENTAL vs. Bank of America | OCCIDENTAL vs. GE Aerospace |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
Other Complementary Tools
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world |