Correlation Between Merck and 70450YAM5
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By analyzing existing cross correlation between Merck Company and PYPL 505 01 JUN 52, you can compare the effects of market volatilities on Merck and 70450YAM5 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 70450YAM5. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and 70450YAM5.
Diversification Opportunities for Merck and 70450YAM5
Very poor diversification
The 3 months correlation between Merck and 70450YAM5 is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and PYPL 505 01 JUN 52 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PYPL 505 01 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 70450YAM5. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PYPL 505 01 has no effect on the direction of Merck i.e., Merck and 70450YAM5 go up and down completely randomly.
Pair Corralation between Merck and 70450YAM5
Considering the 90-day investment horizon Merck Company is expected to under-perform the 70450YAM5. In addition to that, Merck is 1.18 times more volatile than PYPL 505 01 JUN 52. It trades about -0.16 of its total potential returns per unit of risk. PYPL 505 01 JUN 52 is currently generating about -0.04 per unit of volatility. If you would invest 9,738 in PYPL 505 01 JUN 52 on September 3, 2024 and sell it today you would lose (256.00) from holding PYPL 505 01 JUN 52 or give up 2.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 96.88% |
| Values | Daily Returns |
Merck Company vs. PYPL 505 01 JUN 52
Performance |
| Timeline |
| Merck Company |
| PYPL 505 01 |
Merck and 70450YAM5 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and 70450YAM5
The main advantage of trading using opposite Merck and 70450YAM5 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, 70450YAM5 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 70450YAM5 will offset losses from the drop in 70450YAM5's long position.| Merck vs. Pfizer Inc | Merck vs. Johnson Johnson | Merck vs. Highway Holdings Limited | Merck vs. QCR Holdings |
| 70450YAM5 vs. Western Asset Investment | 70450YAM5 vs. SEI Investments | 70450YAM5 vs. KVH Industries | 70450YAM5 vs. Dave Busters Entertainment |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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