Correlation Between Koninklijke Philips and Merit Medical
Can any of the company-specific risk be diversified away by investing in both Koninklijke Philips 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 Koninklijke Philips and Merit Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Koninklijke Philips NV and Merit Medical Systems, you can compare the effects of market volatilities on Koninklijke Philips 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 Koninklijke Philips with a short position of Merit Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Koninklijke Philips and Merit Medical.
Diversification Opportunities for Koninklijke Philips and Merit Medical
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Koninklijke and Merit is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Koninklijke Philips NV 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 Koninklijke Philips 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 Koninklijke Philips NV 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 Koninklijke Philips i.e., Koninklijke Philips and Merit Medical go up and down completely randomly.
Pair Corralation between Koninklijke Philips and Merit Medical
Considering the 90-day investment horizon Koninklijke Philips NV is expected to generate 1.48 times more return on investment than Merit Medical. However, Koninklijke Philips is 1.48 times more volatile than Merit Medical Systems. It trades about 0.07 of its potential returns per unit of risk. Merit Medical Systems is currently generating about 0.06 per unit of risk. If you would invest 1,314 in Koninklijke Philips NV on August 27, 2024 and sell it today you would earn a total of 1,325 from holding Koninklijke Philips NV or generate 100.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Koninklijke Philips NV vs. Merit Medical Systems
Performance |
| Timeline |
| Koninklijke Philips |
| Merit Medical Systems |
Koninklijke Philips and Merit Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Koninklijke Philips and Merit Medical
The main advantage of trading using opposite Koninklijke Philips and Merit Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Koninklijke Philips 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.| Koninklijke Philips vs. Heartbeam | Koninklijke Philips vs. EUDA Health Holdings | Koninklijke Philips vs. Nutex Health | Koninklijke Philips vs. Healthcare Triangle |
| Merit Medical vs. Heartbeam | Merit Medical vs. EUDA Health Holdings | Merit Medical vs. Nutex Health | Merit Medical vs. Healthcare Triangle |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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