Correlation Between Merck and Franklin Exponential
Can any of the company-specific risk be diversified away by investing in both Merck and Franklin Exponential 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 Franklin Exponential into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Franklin Exponential Data, you can compare the effects of market volatilities on Merck and Franklin Exponential 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 Franklin Exponential. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Franklin Exponential.
Diversification Opportunities for Merck and Franklin Exponential
-0.86 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Merck and Franklin is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Franklin Exponential Data in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Exponential Data 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 Franklin Exponential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Exponential Data has no effect on the direction of Merck i.e., Merck and Franklin Exponential go up and down completely randomly.
Pair Corralation between Merck and Franklin Exponential
Considering the 90-day investment horizon Merck Company is expected to under-perform the Franklin Exponential. In addition to that, Merck is 1.03 times more volatile than Franklin Exponential Data. It trades about -0.03 of its total potential returns per unit of risk. Franklin Exponential Data is currently generating about 0.32 per unit of volatility. If you would invest 2,450 in Franklin Exponential Data on August 29, 2024 and sell it today you would earn a total of 242.00 from holding Franklin Exponential Data or generate 9.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merck Company vs. Franklin Exponential Data
Performance |
| Timeline |
| Merck Company |
| Franklin Exponential Data |
Merck and Franklin Exponential Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Franklin Exponential
The main advantage of trading using opposite Merck and Franklin Exponential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Franklin Exponential 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 Franklin Exponential will offset losses from the drop in Franklin Exponential's long position.| Merck vs. Pharvaris BV | Merck vs. Brinker International | Merck vs. Alcoa Corp | Merck vs. Direxion Daily FTSE |
| Franklin Exponential vs. Franklin Disruptive Commerce | Franklin Exponential vs. Franklin Templeton ETF | Franklin Exponential vs. Esoterica NextG Economy | Franklin Exponential vs. TrueShares Technology AI |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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