Correlation Between Merck and SHERWIN
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By analyzing existing cross correlation between Merck Company and SHERWIN WILLIAMS 33 percent, you can compare the effects of market volatilities on Merck and SHERWIN 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 SHERWIN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and SHERWIN.
Diversification Opportunities for Merck and SHERWIN
Very good diversification
The 3 months correlation between Merck and SHERWIN is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and SHERWIN WILLIAMS 33 percent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHERWIN WILLIAMS 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 SHERWIN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SHERWIN WILLIAMS has no effect on the direction of Merck i.e., Merck and SHERWIN go up and down completely randomly.
Pair Corralation between Merck and SHERWIN
Considering the 90-day investment horizon Merck Company is expected to under-perform the SHERWIN. In addition to that, Merck is 4.89 times more volatile than SHERWIN WILLIAMS 33 percent. It trades about -0.12 of its total potential returns per unit of risk. SHERWIN WILLIAMS 33 percent is currently generating about 0.0 per unit of volatility. If you would invest 9,839 in SHERWIN WILLIAMS 33 percent on September 3, 2024 and sell it today you would lose (12.00) from holding SHERWIN WILLIAMS 33 percent or give up 0.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 63.2% |
| Values | Daily Returns |
Merck Company vs. SHERWIN WILLIAMS 33 percent
Performance |
| Timeline |
| Merck Company |
| SHERWIN WILLIAMS |
Merck and SHERWIN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and SHERWIN
The main advantage of trading using opposite Merck and SHERWIN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, SHERWIN 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 SHERWIN will offset losses from the drop in SHERWIN's long position.| Merck vs. Pfizer Inc | Merck vs. Johnson Johnson | Merck vs. Highway Holdings Limited | Merck vs. QCR Holdings |
| SHERWIN vs. The Travelers Companies | SHERWIN vs. GE Aerospace | SHERWIN vs. Walmart | SHERWIN vs. Pfizer Inc |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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