Correlation Between Merck and WHOLE
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By analyzing existing cross correlation between Merck Company and WHOLE FOODS MKT, you can compare the effects of market volatilities on Merck and WHOLE 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 WHOLE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and WHOLE.
Diversification Opportunities for Merck and WHOLE
Good diversification
The 3 months correlation between Merck and WHOLE is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and WHOLE FOODS MKT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WHOLE FOODS MKT 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 WHOLE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WHOLE FOODS MKT has no effect on the direction of Merck i.e., Merck and WHOLE go up and down completely randomly.
Pair Corralation between Merck and WHOLE
Considering the 90-day investment horizon Merck Company is expected to under-perform the WHOLE. In addition to that, Merck is 2.91 times more volatile than WHOLE FOODS MKT. It trades about -0.06 of its total potential returns per unit of risk. WHOLE FOODS MKT is currently generating about -0.01 per unit of volatility. If you would invest 9,983 in WHOLE FOODS MKT on November 4, 2024 and sell it today you would lose (67.00) from holding WHOLE FOODS MKT or give up 0.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 78.95% |
| Values | Daily Returns |
Merck Company vs. WHOLE FOODS MKT
Performance |
| Timeline |
| Merck Company |
| WHOLE FOODS MKT |
Merck and WHOLE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and WHOLE
The main advantage of trading using opposite Merck and WHOLE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, WHOLE 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 WHOLE will offset losses from the drop in WHOLE's long position.The idea behind Merck Company and WHOLE FOODS MKT 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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