Correlation Between Merck and SUMIBK
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By analyzing existing cross correlation between Merck Company and SUMIBK 2222 17 SEP 31, you can compare the effects of market volatilities on Merck and SUMIBK 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 SUMIBK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and SUMIBK.
Diversification Opportunities for Merck and SUMIBK
Very weak diversification
The 3 months correlation between Merck and SUMIBK is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and SUMIBK 2222 17 SEP 31 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SUMIBK 2222 17 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 SUMIBK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SUMIBK 2222 17 has no effect on the direction of Merck i.e., Merck and SUMIBK go up and down completely randomly.
Pair Corralation between Merck and SUMIBK
Considering the 90-day investment horizon Merck Company is expected to generate 0.77 times more return on investment than SUMIBK. However, Merck Company is 1.3 times less risky than SUMIBK. It trades about 0.0 of its potential returns per unit of risk. SUMIBK 2222 17 SEP 31 is currently generating about -0.18 per unit of risk. If you would invest 10,188 in Merck Company on September 2, 2024 and sell it today you would lose (24.00) from holding Merck Company or give up 0.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 76.19% |
| Values | Daily Returns |
Merck Company vs. SUMIBK 2222 17 SEP 31
Performance |
| Timeline |
| Merck Company |
| SUMIBK 2222 17 |
Merck and SUMIBK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and SUMIBK
The main advantage of trading using opposite Merck and SUMIBK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, SUMIBK 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 SUMIBK will offset losses from the drop in SUMIBK's long position.The idea behind Merck Company and SUMIBK 2222 17 SEP 31 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.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 Stocks Directory module to find actively traded stocks across global markets.
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