Correlation Between Merck and 74166NAA2
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By analyzing existing cross correlation between Merck Company and ADT Corp 4875, you can compare the effects of market volatilities on Merck and 74166NAA2 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 74166NAA2. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and 74166NAA2.
Diversification Opportunities for Merck and 74166NAA2
Very poor diversification
The 3 months correlation between Merck and 74166NAA2 is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and ADT Corp 4875 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADT Corp 4875 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 74166NAA2. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADT Corp 4875 has no effect on the direction of Merck i.e., Merck and 74166NAA2 go up and down completely randomly.
Pair Corralation between Merck and 74166NAA2
Considering the 90-day investment horizon Merck Company is expected to generate 0.68 times more return on investment than 74166NAA2. However, Merck Company is 1.48 times less risky than 74166NAA2. It trades about -0.17 of its potential returns per unit of risk. ADT Corp 4875 is currently generating about -0.25 per unit of risk. If you would invest 10,398 in Merck Company on August 26, 2024 and sell it today you would lose (480.00) from holding Merck Company or give up 4.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 90.91% |
| Values | Daily Returns |
Merck Company vs. ADT Corp 4875
Performance |
| Timeline |
| Merck Company |
| ADT Corp 4875 |
Merck and 74166NAA2 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and 74166NAA2
The main advantage of trading using opposite Merck and 74166NAA2 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, 74166NAA2 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 74166NAA2 will offset losses from the drop in 74166NAA2's long position.| Merck vs. Capricor Therapeutics | Merck vs. Akari Therapeutics PLC | Merck vs. Soleno Therapeutics | Merck vs. Bio Path Holdings |
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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