Correlation Between Merck and QUALCOMM
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By analyzing existing cross correlation between Merck Company and QUALCOMM INCORPORATED, you can compare the effects of market volatilities on Merck and QUALCOMM 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 QUALCOMM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and QUALCOMM.
Diversification Opportunities for Merck and QUALCOMM
Poor diversification
The 3 months correlation between Merck and QUALCOMM is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and QUALCOMM INCORPORATED in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QUALCOMM INCORPORATED 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 QUALCOMM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QUALCOMM INCORPORATED has no effect on the direction of Merck i.e., Merck and QUALCOMM go up and down completely randomly.
Pair Corralation between Merck and QUALCOMM
Considering the 90-day investment horizon Merck Company is expected to under-perform the QUALCOMM. In addition to that, Merck is 1.13 times more volatile than QUALCOMM INCORPORATED. It trades about -0.02 of its total potential returns per unit of risk. QUALCOMM INCORPORATED is currently generating about -0.01 per unit of volatility. If you would invest 8,791 in QUALCOMM INCORPORATED on September 1, 2024 and sell it today you would lose (28.00) from holding QUALCOMM INCORPORATED or give up 0.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Merck Company vs. QUALCOMM INCORPORATED
Performance |
| Timeline |
| Merck Company |
| QUALCOMM INCORPORATED |
Merck and QUALCOMM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and QUALCOMM
The main advantage of trading using opposite Merck and QUALCOMM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, QUALCOMM 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 QUALCOMM will offset losses from the drop in QUALCOMM's long position.The idea behind Merck Company and QUALCOMM INCORPORATED 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.| QUALCOMM vs. Eldorado Gold Corp | QUALCOMM vs. RCI Hospitality Holdings | QUALCOMM vs. Meli Hotels International | QUALCOMM vs. Aerofoam Metals |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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