Correlation Between Western Sierra and Merit Medical
Can any of the company-specific risk be diversified away by investing in both Western Sierra 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 Western Sierra and Merit Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Sierra Mining and Merit Medical Systems, you can compare the effects of market volatilities on Western Sierra 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 Western Sierra with a short position of Merit Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Sierra and Merit Medical.
Diversification Opportunities for Western Sierra and Merit Medical
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Western and Merit is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Western Sierra Mining 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 Western Sierra 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 Western Sierra Mining 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 Western Sierra i.e., Western Sierra and Merit Medical go up and down completely randomly.
Pair Corralation between Western Sierra and Merit Medical
Given the investment horizon of 90 days Western Sierra is expected to generate 246.9 times less return on investment than Merit Medical. But when comparing it to its historical volatility, Western Sierra Mining is 2.68 times less risky than Merit Medical. It trades about 0.0 of its potential returns per unit of risk. Merit Medical Systems is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 9,880 in Merit Medical Systems on September 2, 2024 and sell it today you would earn a total of 510.00 from holding Merit Medical Systems or generate 5.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Western Sierra Mining vs. Merit Medical Systems
Performance |
| Timeline |
| Western Sierra Mining |
| Merit Medical Systems |
Western Sierra and Merit Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Sierra and Merit Medical
The main advantage of trading using opposite Western Sierra and Merit Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Sierra 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.| Western Sierra vs. Holloman Energy Corp | Western Sierra vs. cbdMD Inc | Western Sierra vs. Evolus Inc | Western Sierra vs. CV Sciences |
| Merit Medical vs. Profound Medical Corp | Merit Medical vs. Si Bone | Merit Medical vs. Nevro Corp | Merit Medical vs. Orthopediatrics 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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