Correlation Between Distoken Acquisition and Merrill Lynch

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

By analyzing existing cross correlation between Distoken Acquisition and Merrill Lynch Depositor, you can compare the effects of market volatilities on Distoken Acquisition and Merrill Lynch 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 Distoken Acquisition with a short position of Merrill Lynch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Distoken Acquisition and Merrill Lynch.

Diversification Opportunities for Distoken Acquisition and Merrill Lynch

-0.56

Correlation Coefficient

Distoken Acquisition  Merrill Lynch

Excellent diversification

The 3 months correlation between Distoken and Merrill is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Distoken Acquisition and Merrill Lynch Depositor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merrill Lynch Depositor and Distoken Acquisition 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 Distoken Acquisition are associated (or correlated) with Merrill Lynch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merrill Lynch Depositor has no effect on the direction of Distoken Acquisition i.e., Distoken Acquisition and Merrill Lynch go up and down completely randomly.

Pair Corralation between Distoken Acquisition and Merrill Lynch

Assuming the 90 days horizon Distoken Acquisition is expected to generate 26.73 times more return on investment than Merrill Lynch. However, Distoken Acquisition is 26.73 times more volatile than Merrill Lynch Depositor. It trades about 0.08 of its potential returns per unit of risk. Merrill Lynch Depositor is currently generating about 0.02 per unit of risk. If you would invest  0.00  in Distoken Acquisition on September 20, 2024 and sell it today you would earn a total of  11.01  from holding Distoken Acquisition or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	46.12%
Values	Daily Returns

Distoken Acquisition  vs.  Merrill Lynch Depositor

Distoken Acquisition

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Distoken Acquisition are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal basic indicators, Distoken Acquisition reported solid returns over the last few months and may actually be approaching a breakup point.

Merrill Lynch Depositor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Merrill Lynch Depositor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Merrill Lynch is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Distoken Acquisition and Merrill Lynch

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

The idea behind Distoken Acquisition and Merrill Lynch Depositor 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.