Correlation Between Merck and WELLPOINT
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By analyzing existing cross correlation between Merck Company and WELLPOINT INC 465, you can compare the effects of market volatilities on Merck and WELLPOINT 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 WELLPOINT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and WELLPOINT.
Diversification Opportunities for Merck and WELLPOINT
Significant diversification
The 3 months correlation between Merck and WELLPOINT is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and WELLPOINT INC 465 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WELLPOINT INC 465 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 WELLPOINT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WELLPOINT INC 465 has no effect on the direction of Merck i.e., Merck and WELLPOINT go up and down completely randomly.
Pair Corralation between Merck and WELLPOINT
Considering the 90-day investment horizon Merck Company is expected to under-perform the WELLPOINT. But the stock apears to be less risky and, when comparing its historical volatility, Merck Company is 51.26 times less risky than WELLPOINT. The stock trades about -0.01 of its potential returns per unit of risk. The WELLPOINT INC 465 is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 9,091 in WELLPOINT INC 465 on November 30, 2024 and sell it today you would earn a total of 546.00 from holding WELLPOINT INC 465 or generate 6.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 89.88% |
| Values | Daily Returns |
Merck Company vs. WELLPOINT INC 465
Performance |
| Timeline |
| Merck Company |
| WELLPOINT INC 465 |
Merck and WELLPOINT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and WELLPOINT
The main advantage of trading using opposite Merck and WELLPOINT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, WELLPOINT 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 WELLPOINT will offset losses from the drop in WELLPOINT's long position.The idea behind Merck Company and WELLPOINT INC 465 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.| WELLPOINT vs. Hurco Companies | WELLPOINT vs. Cementos Pacasmayo SAA | WELLPOINT vs. Sun Country Airlines | WELLPOINT vs. Griffon |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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