Correlation Between Merck and Vindicator Silver
Can any of the company-specific risk be diversified away by investing in both Merck and Vindicator Silver 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 Vindicator Silver into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Vindicator Silver Lead Mining, you can compare the effects of market volatilities on Merck and Vindicator Silver 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 Vindicator Silver. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Vindicator Silver.
Diversification Opportunities for Merck and Vindicator Silver
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Merck and Vindicator is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Vindicator Silver Lead Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vindicator Silver Lead 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 Vindicator Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vindicator Silver Lead has no effect on the direction of Merck i.e., Merck and Vindicator Silver go up and down completely randomly.
Pair Corralation between Merck and Vindicator Silver
Considering the 90-day investment horizon Merck Company is expected to under-perform the Vindicator Silver. But the stock apears to be less risky and, when comparing its historical volatility, Merck Company is 9.64 times less risky than Vindicator Silver. The stock trades about -0.11 of its potential returns per unit of risk. The Vindicator Silver Lead Mining is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 13.00 in Vindicator Silver Lead Mining on September 1, 2024 and sell it today you would earn a total of 2.00 from holding Vindicator Silver Lead Mining or generate 15.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merck Company vs. Vindicator Silver Lead Mining
Performance |
| Timeline |
| Merck Company |
| Vindicator Silver Lead |
Merck and Vindicator Silver Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Vindicator Silver
The main advantage of trading using opposite Merck and Vindicator Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Vindicator Silver 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 Vindicator Silver will offset losses from the drop in Vindicator Silver's long position.The idea behind Merck Company and Vindicator Silver Lead Mining 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.| Vindicator Silver vs. TVI Pacific | Vindicator Silver vs. Industrias Penoles Sab | Vindicator Silver vs. HUMANA INC | Vindicator Silver vs. SCOR PK |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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