Correlation Between Yokohama Rubber and Merit Medical
Can any of the company-specific risk be diversified away by investing in both Yokohama Rubber 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 Yokohama Rubber and Merit Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Yokohama Rubber and Merit Medical Systems, you can compare the effects of market volatilities on Yokohama Rubber 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 Yokohama Rubber with a short position of Merit Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yokohama Rubber and Merit Medical.
Diversification Opportunities for Yokohama Rubber and Merit Medical
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Yokohama and Merit is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding The Yokohama Rubber 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 Yokohama Rubber 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 The Yokohama Rubber 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 Yokohama Rubber i.e., Yokohama Rubber and Merit Medical go up and down completely randomly.
Pair Corralation between Yokohama Rubber and Merit Medical
Assuming the 90 days trading horizon Yokohama Rubber is expected to generate 3.94 times less return on investment than Merit Medical. But when comparing it to its historical volatility, The Yokohama Rubber is 1.09 times less risky than Merit Medical. It trades about 0.1 of its potential returns per unit of risk. Merit Medical Systems is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 9,150 in Merit Medical Systems on November 6, 2024 and sell it today you would earn a total of 1,150 from holding Merit Medical Systems or generate 12.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Yokohama Rubber vs. Merit Medical Systems
Performance |
| Timeline |
| Yokohama Rubber |
| Merit Medical Systems |
Yokohama Rubber and Merit Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yokohama Rubber and Merit Medical
The main advantage of trading using opposite Yokohama Rubber and Merit Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yokohama Rubber 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.| Yokohama Rubber vs. CREO MEDICAL GRP | Yokohama Rubber vs. Ultra Clean Holdings | Yokohama Rubber vs. CLEAN ENERGY FUELS | Yokohama Rubber vs. ULTRA CLEAN HLDGS |
| Merit Medical vs. China BlueChemical | Merit Medical vs. MACOM Technology Solutions | Merit Medical vs. PKSHA TECHNOLOGY INC | Merit Medical vs. TIANDE CHEMICAL |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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