Correlation Between Merck and SPDR FactSet
Can any of the company-specific risk be diversified away by investing in both Merck and SPDR FactSet 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 SPDR FactSet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and SPDR FactSet Innovative, you can compare the effects of market volatilities on Merck and SPDR FactSet 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 SPDR FactSet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and SPDR FactSet.
Diversification Opportunities for Merck and SPDR FactSet
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Merck and SPDR is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and SPDR FactSet Innovative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR FactSet Innovative 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 SPDR FactSet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR FactSet Innovative has no effect on the direction of Merck i.e., Merck and SPDR FactSet go up and down completely randomly.
Pair Corralation between Merck and SPDR FactSet
Considering the 90-day investment horizon Merck Company is expected to under-perform the SPDR FactSet. But the stock apears to be less risky and, when comparing its historical volatility, Merck Company is 1.33 times less risky than SPDR FactSet. The stock trades about 0.0 of its potential returns per unit of risk. The SPDR FactSet Innovative is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 10,142 in SPDR FactSet Innovative on August 26, 2024 and sell it today you would earn a total of 7,927 from holding SPDR FactSet Innovative or generate 78.16% 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. SPDR FactSet Innovative
Performance |
| Timeline |
| Merck Company |
| SPDR FactSet Innovative |
Merck and SPDR FactSet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and SPDR FactSet
The main advantage of trading using opposite Merck and SPDR FactSet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, SPDR FactSet 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 SPDR FactSet will offset losses from the drop in SPDR FactSet's long position.| Merck vs. Capricor Therapeutics | Merck vs. Soleno Therapeutics | Merck vs. Bio Path Holdings | Merck vs. Moleculin Biotech |
| SPDR FactSet vs. SPDR SP Software | SPDR FactSet vs. SPDR Morgan Stanley | SPDR FactSet vs. SPDR SP Health |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
Other Complementary Tools
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas |