Correlation Between Merck and WISCONSIN
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By analyzing existing cross correlation between Merck Company and WISCONSIN ELEC PWR, you can compare the effects of market volatilities on Merck and WISCONSIN 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 WISCONSIN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and WISCONSIN.
Diversification Opportunities for Merck and WISCONSIN
Excellent diversification
The 3 months correlation between Merck and WISCONSIN is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and WISCONSIN ELEC PWR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WISCONSIN ELEC PWR 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 WISCONSIN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WISCONSIN ELEC PWR has no effect on the direction of Merck i.e., Merck and WISCONSIN go up and down completely randomly.
Pair Corralation between Merck and WISCONSIN
Considering the 90-day investment horizon Merck Company is expected to generate 1.87 times more return on investment than WISCONSIN. However, Merck is 1.87 times more volatile than WISCONSIN ELEC PWR. It trades about 0.01 of its potential returns per unit of risk. WISCONSIN ELEC PWR is currently generating about -0.36 per unit of risk. If you would invest 10,187 in Merck Company on September 5, 2024 and sell it today you would lose (2.00) from holding Merck Company or give up 0.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 68.18% |
| Values | Daily Returns |
Merck Company vs. WISCONSIN ELEC PWR
Performance |
| Timeline |
| Merck Company |
| WISCONSIN ELEC PWR |
Merck and WISCONSIN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and WISCONSIN
The main advantage of trading using opposite Merck and WISCONSIN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, WISCONSIN 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 WISCONSIN will offset losses from the drop in WISCONSIN's long position.| Merck vs. Crinetics Pharmaceuticals | Merck vs. Enanta Pharmaceuticals | Merck vs. Amicus Therapeutics | Merck vs. Connect Biopharma Holdings |
| WISCONSIN vs. Lipocine | WISCONSIN vs. Datadog | WISCONSIN vs. SmartStop Self Storage | WISCONSIN vs. Amkor Technology |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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