Correlation Between Merck and ORACLE
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By analyzing existing cross correlation between Merck Company and ORACLE PORATION, you can compare the effects of market volatilities on Merck and ORACLE 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 ORACLE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and ORACLE.
Diversification Opportunities for Merck and ORACLE
Very poor diversification
The 3 months correlation between Merck and ORACLE is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and ORACLE PORATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ORACLE PORATION 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 ORACLE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ORACLE PORATION has no effect on the direction of Merck i.e., Merck and ORACLE go up and down completely randomly.
Pair Corralation between Merck and ORACLE
Considering the 90-day investment horizon Merck Company is expected to under-perform the ORACLE. In addition to that, Merck is 1.07 times more volatile than ORACLE PORATION. It trades about -0.09 of its total potential returns per unit of risk. ORACLE PORATION is currently generating about 0.03 per unit of volatility. If you would invest 8,868 in ORACLE PORATION on August 31, 2024 and sell it today you would earn a total of 59.00 from holding ORACLE PORATION or generate 0.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merck Company vs. ORACLE PORATION
Performance |
| Timeline |
| Merck Company |
| ORACLE PORATION |
Merck and ORACLE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and ORACLE
The main advantage of trading using opposite Merck and ORACLE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, ORACLE 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 ORACLE will offset losses from the drop in ORACLE's long position.The idea behind Merck Company and ORACLE PORATION 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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