Correlation Between Weyco and Merit Medical
Can any of the company-specific risk be diversified away by investing in both Weyco 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 Weyco and Merit Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Weyco Group and Merit Medical Systems, you can compare the effects of market volatilities on Weyco 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 Weyco with a short position of Merit Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weyco and Merit Medical.
Diversification Opportunities for Weyco and Merit Medical
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Weyco and Merit is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Weyco Group 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 Weyco 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 Weyco Group 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 Weyco i.e., Weyco and Merit Medical go up and down completely randomly.
Pair Corralation between Weyco and Merit Medical
Given the investment horizon of 90 days Weyco Group is expected to generate 1.36 times more return on investment than Merit Medical. However, Weyco is 1.36 times more volatile than Merit Medical Systems. It trades about 0.05 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 2,425 in Weyco Group on August 25, 2024 and sell it today you would earn a total of 1,220 from holding Weyco Group or generate 50.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Weyco Group vs. Merit Medical Systems
Performance |
| Timeline |
| Weyco Group |
| Merit Medical Systems |
Weyco and Merit Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weyco and Merit Medical
The main advantage of trading using opposite Weyco and Merit Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weyco 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.The idea behind Weyco Group and Merit Medical Systems pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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