Correlation Between Merck and 857477BR3
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By analyzing existing cross correlation between Merck Company and STT 1746 06 FEB 26, you can compare the effects of market volatilities on Merck and 857477BR3 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 857477BR3. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and 857477BR3.
Diversification Opportunities for Merck and 857477BR3
Pay attention - limited upside
The 3 months correlation between Merck and 857477BR3 is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and STT 1746 06 FEB 26 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STT 1746 06 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 857477BR3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STT 1746 06 has no effect on the direction of Merck i.e., Merck and 857477BR3 go up and down completely randomly.
Pair Corralation between Merck and 857477BR3
Considering the 90-day investment horizon Merck Company is expected to under-perform the 857477BR3. But the stock apears to be less risky and, when comparing its historical volatility, Merck Company is 1.6 times less risky than 857477BR3. The stock trades about 0.0 of its potential returns per unit of risk. The STT 1746 06 FEB 26 is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 9,910 in STT 1746 06 FEB 26 on September 2, 2024 and sell it today you would earn a total of 22.00 from holding STT 1746 06 FEB 26 or generate 0.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 42.86% |
| Values | Daily Returns |
Merck Company vs. STT 1746 06 FEB 26
Performance |
| Timeline |
| Merck Company |
| STT 1746 06 |
Merck and 857477BR3 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and 857477BR3
The main advantage of trading using opposite Merck and 857477BR3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, 857477BR3 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 857477BR3 will offset losses from the drop in 857477BR3's long position.The idea behind Merck Company and STT 1746 06 FEB 26 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.| 857477BR3 vs. ATT Inc | 857477BR3 vs. Home Depot | 857477BR3 vs. Cisco Systems | 857477BR3 vs. Dupont De Nemours |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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