Correlation Between Merck and SOUTHERN
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By analyzing existing cross correlation between Merck Company and SOUTHERN CALIF GAS, 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
Excellent diversification
The 3 months correlation between Merck and SOUTHERN is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and SOUTHERN CALIF GAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOUTHERN CALIF GAS 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 GAS 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. In addition to that, Merck is 5.37 times more volatile than SOUTHERN CALIF GAS. It trades about -0.12 of its total potential returns per unit of risk. SOUTHERN CALIF GAS is currently generating about -0.01 per unit of volatility. If you would invest 9,792 in SOUTHERN CALIF GAS on September 3, 2024 and sell it today you would lose (28.00) from holding SOUTHERN CALIF GAS or give up 0.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 74.4% |
| Values | Daily Returns |
Merck Company vs. SOUTHERN CALIF GAS
Performance |
| Timeline |
| Merck Company |
| SOUTHERN CALIF GAS |
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. Pfizer Inc | Merck vs. Johnson Johnson | Merck vs. Highway Holdings Limited | Merck vs. QCR Holdings |
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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