Correlation Between Merck and SOUTHERN
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By analyzing existing cross correlation between Merck Company and SOUTHERN CALIF EDISON, you can compare the effects of market volatilities on Merck and SOUTHERN 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 SOUTHERN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and SOUTHERN.
Diversification Opportunities for Merck and SOUTHERN
Good diversification
The 3 months correlation between Merck and SOUTHERN is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and SOUTHERN CALIF EDISON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOUTHERN CALIF EDISON 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 SOUTHERN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOUTHERN CALIF EDISON has no effect on the direction of Merck i.e., Merck and SOUTHERN go up and down completely randomly.
Pair Corralation between Merck and SOUTHERN
Considering the 90-day investment horizon Merck Company is expected to under-perform the SOUTHERN. But the stock apears to be less risky and, when comparing its historical volatility, Merck Company is 66.18 times less risky than SOUTHERN. The stock trades about 0.0 of its potential returns per unit of risk. The SOUTHERN CALIF EDISON is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 10,029 in SOUTHERN CALIF EDISON on September 4, 2024 and sell it today you would lose (967.00) from holding SOUTHERN CALIF EDISON or give up 9.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 59.6% |
| Values | Daily Returns |
Merck Company vs. SOUTHERN CALIF EDISON
Performance |
| Timeline |
| Merck Company |
| SOUTHERN CALIF EDISON |
Merck and SOUTHERN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and SOUTHERN
The main advantage of trading using opposite Merck and SOUTHERN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, SOUTHERN 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 SOUTHERN will offset losses from the drop in SOUTHERN's long position.| Merck vs. Crinetics Pharmaceuticals | Merck vs. Enanta Pharmaceuticals | Merck vs. Amicus Therapeutics | Merck vs. Connect Biopharma Holdings |
| SOUTHERN vs. Playtech plc | SOUTHERN vs. Dalata Hotel Group | SOUTHERN vs. Biglari Holdings | SOUTHERN vs. National CineMedia |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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