Correlation Between BetterU Education and Merck

Can any of the company-specific risk be diversified away by investing in both BetterU Education and Merck 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 BetterU Education and Merck into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between betterU Education Corp and Merck Company, you can compare the effects of market volatilities on BetterU Education and Merck 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 BetterU Education with a short position of Merck. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetterU Education and Merck.

Diversification Opportunities for BetterU Education and Merck

0.0

Correlation Coefficient

BetterU Education  Merck

Pay attention - limited upside

The 3 months correlation between BetterU and Merck is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding betterU Education Corp and Merck Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merck Company and BetterU Education 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 betterU Education Corp are associated (or correlated) with Merck. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merck Company has no effect on the direction of BetterU Education i.e., BetterU Education and Merck go up and down completely randomly.

Pair Corralation between BetterU Education and Merck

If you would invest  14,075  in Merck Company on October 11, 2024 and sell it today you would earn a total of  180.00  from holding Merck Company or generate 1.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	94.44%
Values	Daily Returns

betterU Education Corp  vs.  Merck Company

betterU Education Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days betterU Education Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, BetterU Education is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Merck Company

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Merck Company has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's forward-looking signals remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with BetterU Education and Merck

The main advantage of trading using opposite BetterU Education and Merck positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BetterU Education position performs unexpectedly, Merck 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 Merck will offset losses from the drop in Merck's long position.

The idea behind betterU Education Corp and Merck Company 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.

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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.