Correlation Between Merck and 743820AA0
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By analyzing existing cross correlation between Merck Company and US743820AA01, you can compare the effects of market volatilities on Merck and 743820AA0 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 743820AA0. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and 743820AA0.
Diversification Opportunities for Merck and 743820AA0
Weak diversification
The 3 months correlation between Merck and 743820AA0 is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and US743820AA01 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US743820AA01 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 743820AA0. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US743820AA01 has no effect on the direction of Merck i.e., Merck and 743820AA0 go up and down completely randomly.
Pair Corralation between Merck and 743820AA0
Considering the 90-day investment horizon Merck Company is expected to under-perform the 743820AA0. In addition to that, Merck is 1.43 times more volatile than US743820AA01. It trades about -0.07 of its total potential returns per unit of risk. US743820AA01 is currently generating about -0.05 per unit of volatility. If you would invest 9,052 in US743820AA01 on November 4, 2024 and sell it today you would lose (421.00) from holding US743820AA01 or give up 4.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 82.26% |
| Values | Daily Returns |
Merck Company vs. US743820AA01
Performance |
| Timeline |
| Merck Company |
| US743820AA01 |
Merck and 743820AA0 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and 743820AA0
The main advantage of trading using opposite Merck and 743820AA0 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, 743820AA0 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 743820AA0 will offset losses from the drop in 743820AA0's long position.The idea behind Merck Company and US743820AA01 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.| 743820AA0 vs. AEP TEX INC | 743820AA0 vs. US BANK NATIONAL | 743820AA0 vs. Reliance Global Group | 743820AA0 vs. Bayerische Motoren Werke |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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