Correlation Between EBRO FOODS and Merit Medical
Can any of the company-specific risk be diversified away by investing in both EBRO FOODS 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 EBRO FOODS and Merit Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EBRO FOODS and Merit Medical Systems, you can compare the effects of market volatilities on EBRO FOODS 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 EBRO FOODS with a short position of Merit Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of EBRO FOODS and Merit Medical.
Diversification Opportunities for EBRO FOODS and Merit Medical
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between EBRO and Merit is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding EBRO FOODS 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 EBRO FOODS 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 EBRO FOODS 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 EBRO FOODS i.e., EBRO FOODS and Merit Medical go up and down completely randomly.
Pair Corralation between EBRO FOODS and Merit Medical
Assuming the 90 days trading horizon EBRO FOODS is expected to generate 0.67 times more return on investment than Merit Medical. However, EBRO FOODS is 1.5 times less risky than Merit Medical. It trades about 0.11 of its potential returns per unit of risk. Merit Medical Systems is currently generating about -0.47 per unit of risk. If you would invest 1,604 in EBRO FOODS on December 2, 2024 and sell it today you would earn a total of 24.00 from holding EBRO FOODS or generate 1.5% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
EBRO FOODS vs. Merit Medical Systems
Performance |
Timeline |
EBRO FOODS |
Merit Medical Systems |
EBRO FOODS and Merit Medical Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with EBRO FOODS and Merit Medical
The main advantage of trading using opposite EBRO FOODS and Merit Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EBRO FOODS 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.EBRO FOODS vs. Motorcar Parts of | EBRO FOODS vs. Beta Systems Software | EBRO FOODS vs. CVW CLEANTECH INC | EBRO FOODS vs. CENTURIA OFFICE REIT |
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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