Correlation Between Merck and VCLO
Can any of the company-specific risk be diversified away by investing in both Merck and VCLO at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Merck and VCLO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and VCLO, you can compare the effects of market volatilities on Merck and VCLO 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 VCLO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and VCLO.
Diversification Opportunities for Merck and VCLO
Poor diversification
The 3 months correlation between Merck and VCLO is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and VCLO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VCLO 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 VCLO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VCLO has no effect on the direction of Merck i.e., Merck and VCLO go up and down completely randomly.
Pair Corralation between Merck and VCLO
If you would invest 448.00 in VCLO on August 29, 2024 and sell it today you would earn a total of 0.00 from holding VCLO or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 4.35% |
| Values | Daily Returns |
Merck Company vs. VCLO
Performance |
| Timeline |
| Merck Company |
| VCLO |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Merck and VCLO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and VCLO
The main advantage of trading using opposite Merck and VCLO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, VCLO 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 VCLO will offset losses from the drop in VCLO's long position.| Merck vs. Pharvaris BV | Merck vs. Brinker International | Merck vs. Alcoa Corp | Merck vs. Direxion Daily FTSE |
| VCLO vs. Nexalin Technology | VCLO vs. Kilroy Realty Corp | VCLO vs. Highwoods Properties | VCLO vs. Karat Packaging |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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