Correlation Between NI Holdings and Merit Medical
Can any of the company-specific risk be diversified away by investing in both NI Holdings and Merit Medical 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 NI Holdings and Merit Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NI Holdings and Merit Medical Systems, you can compare the effects of market volatilities on NI Holdings and Merit Medical 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 NI Holdings with a short position of Merit Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of NI Holdings and Merit Medical.
Diversification Opportunities for NI Holdings and Merit Medical
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NODK and Merit is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding NI Holdings and Merit Medical Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merit Medical Systems and NI Holdings 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 NI Holdings are associated (or correlated) with Merit Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merit Medical Systems has no effect on the direction of NI Holdings i.e., NI Holdings and Merit Medical go up and down completely randomly.
Pair Corralation between NI Holdings and Merit Medical
Given the investment horizon of 90 days NI Holdings is expected to generate 4.0 times less return on investment than Merit Medical. In addition to that, NI Holdings is 1.48 times more volatile than Merit Medical Systems. It trades about 0.03 of its total potential returns per unit of risk. Merit Medical Systems is currently generating about 0.15 per unit of volatility. If you would invest 8,333 in Merit Medical Systems on September 3, 2024 and sell it today you would earn a total of 2,057 from holding Merit Medical Systems or generate 24.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NI Holdings vs. Merit Medical Systems
Performance |
| Timeline |
| NI Holdings |
| Merit Medical Systems |
NI Holdings and Merit Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NI Holdings and Merit Medical
The main advantage of trading using opposite NI Holdings and Merit Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NI Holdings position performs unexpectedly, Merit Medical 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 Merit Medical will offset losses from the drop in Merit Medical's long position.| NI Holdings vs. Horace Mann Educators | NI Holdings vs. Donegal Group A | NI Holdings vs. Global Indemnity PLC | NI Holdings vs. Selective Insurance Group |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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