Correlation Between Treace Medical and Merit Medical
Can any of the company-specific risk be diversified away by investing in both Treace Medical 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 Treace Medical and Merit Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Treace Medical Concepts and Merit Medical Systems, you can compare the effects of market volatilities on Treace Medical 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 Treace Medical with a short position of Merit Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Treace Medical and Merit Medical.
Diversification Opportunities for Treace Medical and Merit Medical
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Treace and Merit is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Treace Medical Concepts 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 Treace Medical 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 Treace Medical Concepts 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 Treace Medical i.e., Treace Medical and Merit Medical go up and down completely randomly.
Pair Corralation between Treace Medical and Merit Medical
Given the investment horizon of 90 days Treace Medical Concepts is expected to under-perform the Merit Medical. In addition to that, Treace Medical is 3.02 times more volatile than Merit Medical Systems. It trades about -0.04 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 10,168 in Merit Medical Systems on September 14, 2024 and sell it today you would earn a total of 307.00 from holding Merit Medical Systems or generate 3.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Treace Medical Concepts vs. Merit Medical Systems
Performance |
| Timeline |
| Treace Medical Concepts |
| Merit Medical Systems |
Treace Medical and Merit Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Treace Medical and Merit Medical
The main advantage of trading using opposite Treace Medical and Merit Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Treace Medical 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.| Treace Medical vs. Rxsight | Treace Medical vs. Axogen Inc | Treace Medical vs. Pulmonx Corp | Treace Medical vs. Orthofix Medical |
| Merit Medical vs. Avita Medical | Merit Medical vs. Sight Sciences | Merit Medical vs. Treace Medical Concepts | Merit Medical vs. Neuropace |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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