Correlation Between ASPEN TECHINC and Merit Medical
Can any of the company-specific risk be diversified away by investing in both ASPEN TECHINC 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 ASPEN TECHINC and Merit Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ASPEN TECHINC DL and Merit Medical Systems, you can compare the effects of market volatilities on ASPEN TECHINC 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 ASPEN TECHINC with a short position of Merit Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASPEN TECHINC and Merit Medical.
Diversification Opportunities for ASPEN TECHINC and Merit Medical
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ASPEN and Merit is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding ASPEN TECHINC DL 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 ASPEN TECHINC 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 ASPEN TECHINC DL 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 ASPEN TECHINC i.e., ASPEN TECHINC and Merit Medical go up and down completely randomly.
Pair Corralation between ASPEN TECHINC and Merit Medical
Assuming the 90 days horizon ASPEN TECHINC DL is expected to generate 1.04 times more return on investment than Merit Medical. However, ASPEN TECHINC is 1.04 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 -0.11 per unit of risk. If you would invest 24,600 in ASPEN TECHINC DL on November 28, 2024 and sell it today you would earn a total of 400.00 from holding ASPEN TECHINC DL or generate 1.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
ASPEN TECHINC DL vs. Merit Medical Systems
Performance |
| Timeline |
| ASPEN TECHINC DL |
| Merit Medical Systems |
ASPEN TECHINC and Merit Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASPEN TECHINC and Merit Medical
The main advantage of trading using opposite ASPEN TECHINC and Merit Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASPEN TECHINC 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.| ASPEN TECHINC vs. MOUNT GIBSON IRON | ASPEN TECHINC vs. MAANSHAN IRON H | ASPEN TECHINC vs. COMMERCIAL VEHICLE | ASPEN TECHINC vs. Cars Inc |
| Merit Medical vs. Micron Technology | Merit Medical vs. Samsung Electronics Co | Merit Medical vs. X FAB Silicon Foundries | Merit Medical vs. KIMBALL ELECTRONICS |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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