Correlation Between Merit Medical and Hugo Boss

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

By analyzing existing cross correlation between Merit Medical Systems and Hugo Boss AG, you can compare the effects of market volatilities on Merit Medical and Hugo Boss 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 Merit Medical with a short position of Hugo Boss. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merit Medical and Hugo Boss.

Diversification Opportunities for Merit Medical and Hugo Boss

-0.44

Correlation Coefficient

Merit Medical  Hugo Boss

Very good diversification

The 3 months correlation between Merit and Hugo is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems and Hugo Boss AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hugo Boss AG and Merit Medical 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 Merit Medical Systems are associated (or correlated) with Hugo Boss. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hugo Boss AG has no effect on the direction of Merit Medical i.e., Merit Medical and Hugo Boss go up and down completely randomly.

Pair Corralation between Merit Medical and Hugo Boss

Assuming the 90 days trading horizon Merit Medical Systems is expected to under-perform the Hugo Boss. But the stock apears to be less risky and, when comparing its historical volatility, Merit Medical Systems is 1.67 times less risky than Hugo Boss. The stock trades about -0.23 of its potential returns per unit of risk. The Hugo Boss AG is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  4,047  in Hugo Boss AG on October 10, 2024 and sell it today you would earn a total of  441.00  from holding Hugo Boss AG or generate 10.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Merit Medical Systems  vs.  Hugo Boss AG

Merit Medical Systems

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Merit Medical Systems are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Merit Medical may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Hugo Boss AG

Risk-Adjusted Performance

6 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hugo Boss AG are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Hugo Boss exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Merit Medical and Hugo Boss

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

The idea behind Merit Medical Systems and Hugo Boss AG 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.