Correlation Between Origin Materials and Merit Medical
Can any of the company-specific risk be diversified away by investing in both Origin Materials 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 Origin Materials and Merit Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Origin Materials and Merit Medical Systems, you can compare the effects of market volatilities on Origin Materials 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 Origin Materials with a short position of Merit Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Origin Materials and Merit Medical.
Diversification Opportunities for Origin Materials and Merit Medical
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Origin and Merit is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Origin Materials 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 Origin Materials 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 Origin Materials 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 Origin Materials i.e., Origin Materials and Merit Medical go up and down completely randomly.
Pair Corralation between Origin Materials and Merit Medical
Given the investment horizon of 90 days Origin Materials is expected to under-perform the Merit Medical. In addition to that, Origin Materials is 4.11 times more volatile than Merit Medical Systems. It trades about -0.02 of its total potential returns per unit of risk. Merit Medical Systems is currently generating about 0.23 per unit of volatility. If you would invest 9,908 in Merit Medical Systems on September 4, 2024 and sell it today you would earn a total of 575.00 from holding Merit Medical Systems or generate 5.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Origin Materials vs. Merit Medical Systems
Performance |
| Timeline |
| Origin Materials |
| Merit Medical Systems |
Origin Materials and Merit Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Origin Materials and Merit Medical
The main advantage of trading using opposite Origin Materials and Merit Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Origin Materials 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.| Origin Materials vs. Tronox Holdings PLC | Origin Materials vs. Valhi Inc | Origin Materials vs. Lsb Industries | Origin Materials vs. Huntsman |
| Merit Medical vs. Baxter International | Merit Medical vs. West Pharmaceutical Services | Merit Medical vs. ResMed Inc | Merit Medical vs. The Cooper Companies, |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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