Correlation Between Under Armour and Merit Medical
Can any of the company-specific risk be diversified away by investing in both Under Armour 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 Under Armour and Merit Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Under Armour C and Merit Medical Systems, you can compare the effects of market volatilities on Under Armour 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 Under Armour with a short position of Merit Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Under Armour and Merit Medical.
Diversification Opportunities for Under Armour and Merit Medical
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Under and Merit is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Under Armour C 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 Under Armour 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 Under Armour C 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 Under Armour i.e., Under Armour and Merit Medical go up and down completely randomly.
Pair Corralation between Under Armour and Merit Medical
Allowing for the 90-day total investment horizon Under Armour C is expected to generate 3.84 times more return on investment than Merit Medical. However, Under Armour is 3.84 times more volatile than Merit Medical Systems. It trades about 0.06 of its potential returns per unit of risk. Merit Medical Systems is currently generating about 0.17 per unit of risk. If you would invest 808.00 in Under Armour C on September 3, 2024 and sell it today you would earn a total of 69.00 from holding Under Armour C or generate 8.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Under Armour C vs. Merit Medical Systems
Performance |
| Timeline |
| Under Armour C |
| Merit Medical Systems |
Under Armour and Merit Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Under Armour and Merit Medical
The main advantage of trading using opposite Under Armour and Merit Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Under Armour 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.| Under Armour vs. Levi Strauss Co | Under Armour vs. Columbia Sportswear | Under Armour vs. Hanesbrands | Under Armour vs. PVH Corp |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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