Correlation Between Merck and Vanguard Mid
Can any of the company-specific risk be diversified away by investing in both Merck and Vanguard Mid 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 Vanguard Mid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Vanguard Mid Cap Index, you can compare the effects of market volatilities on Merck and Vanguard Mid 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 Vanguard Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Vanguard Mid.
Diversification Opportunities for Merck and Vanguard Mid
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Merck and Vanguard is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Vanguard Mid Cap Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Mid Cap 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 Vanguard Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Mid Cap has no effect on the direction of Merck i.e., Merck and Vanguard Mid go up and down completely randomly.
Pair Corralation between Merck and Vanguard Mid
Considering the 90-day investment horizon Merck Company is expected to generate 2.19 times more return on investment than Vanguard Mid. However, Merck is 2.19 times more volatile than Vanguard Mid Cap Index. It trades about 0.16 of its potential returns per unit of risk. Vanguard Mid Cap Index is currently generating about 0.0 per unit of risk. If you would invest 9,579 in Merck Company on September 18, 2024 and sell it today you would earn a total of 430.00 from holding Merck Company or generate 4.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merck Company vs. Vanguard Mid Cap Index
Performance |
| Timeline |
| Merck Company |
| Vanguard Mid Cap |
Merck and Vanguard Mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Vanguard Mid
The main advantage of trading using opposite Merck and Vanguard Mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Vanguard Mid 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 Vanguard Mid will offset losses from the drop in Vanguard Mid's long position.| Merck vs. Emergent Biosolutions | Merck vs. Neurocrine Biosciences | Merck vs. Teva Pharma Industries | Merck vs. Haleon plc |
| Vanguard Mid vs. Vanguard Small Cap Index | Vanguard Mid vs. Vanguard Large Cap Index | Vanguard Mid vs. Vanguard Small Cap Growth | Vanguard Mid vs. Vanguard Small Cap Value |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
Other Complementary Tools
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities |