Correlation Between Merit Medical and Sixt Leasing

Can any of the company-specific risk be diversified away by investing in both Merit Medical and Sixt Leasing 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 Sixt Leasing 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 Sixt Leasing SE, you can compare the effects of market volatilities on Merit Medical and Sixt Leasing 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 Sixt Leasing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merit Medical and Sixt Leasing.

Diversification Opportunities for Merit Medical and Sixt Leasing

-0.2

Correlation Coefficient

Merit Medical  Sixt Leasing

Good diversification

The 3 months correlation between Merit and Sixt is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems and Sixt Leasing SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sixt Leasing SE 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 Sixt Leasing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sixt Leasing SE has no effect on the direction of Merit Medical i.e., Merit Medical and Sixt Leasing go up and down completely randomly.

Pair Corralation between Merit Medical and Sixt Leasing

Assuming the 90 days trading horizon Merit Medical Systems is expected to under-perform the Sixt Leasing. But the stock apears to be less risky and, when comparing its historical volatility, Merit Medical Systems is 1.6 times less risky than Sixt Leasing. The stock trades about -0.02 of its potential returns per unit of risk. The Sixt Leasing SE is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  940.00  in Sixt Leasing SE on December 21, 2024 and sell it today you would earn a total of  20.00  from holding Sixt Leasing SE or generate 2.13% return on investment over 90 days.

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

Merit Medical Systems  vs.  Sixt Leasing SE

Merit Medical Systems

Risk-Adjusted Performance

Very Weak

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

Sixt Leasing SE

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sixt Leasing SE are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Sixt Leasing is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Merit Medical and Sixt Leasing

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

The idea behind Merit Medical Systems and Sixt Leasing SE 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.