Correlation Between Merit Medical and TYSON FOODS

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

Diversification Opportunities for Merit Medical and TYSON FOODS

0.87

Correlation Coefficient

Merit Medical  TYSON FOODS

Very poor diversification

The 3 months correlation between Merit and TYSON is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems and TYSON FOODS A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TYSON FOODS A 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 TYSON FOODS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TYSON FOODS A has no effect on the direction of Merit Medical i.e., Merit Medical and TYSON FOODS go up and down completely randomly.

Pair Corralation between Merit Medical and TYSON FOODS

Assuming the 90 days trading horizon Merit Medical Systems is expected to generate 1.03 times more return on investment than TYSON FOODS. However, Merit Medical is 1.03 times more volatile than TYSON FOODS A . It trades about 0.15 of its potential returns per unit of risk. TYSON FOODS A is currently generating about 0.08 per unit of risk. If you would invest  8,600  in Merit Medical Systems on September 13, 2024 and sell it today you would earn a total of  1,350  from holding Merit Medical Systems or generate 15.7% return on investment over 90 days.

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

Merit Medical Systems  vs.  TYSON FOODS A

Merit Medical Systems

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Merit Medical Systems are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Merit Medical unveiled solid returns over the last few months and may actually be approaching a breakup point.

TYSON FOODS A

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in TYSON FOODS A are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, TYSON FOODS may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Merit Medical and TYSON FOODS

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

The idea behind Merit Medical Systems and TYSON FOODS A 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.