Correlation Between Merit Medical and Artisan Partners

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

Diversification Opportunities for Merit Medical and Artisan Partners

0.9

Correlation Coefficient

Merit Medical  Artisan Partners

Almost no diversification

The 3 months correlation between Merit and Artisan is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems and Artisan Partners Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Artisan Partners Asset 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 Artisan Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Artisan Partners Asset has no effect on the direction of Merit Medical i.e., Merit Medical and Artisan Partners go up and down completely randomly.

Pair Corralation between Merit Medical and Artisan Partners

Given the investment horizon of 90 days Merit Medical is expected to generate 2.37 times less return on investment than Artisan Partners. But when comparing it to its historical volatility, Merit Medical Systems is 1.58 times less risky than Artisan Partners. It trades about 0.01 of its potential returns per unit of risk. Artisan Partners Asset is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  4,147  in Artisan Partners Asset on October 8, 2024 and sell it today you would earn a total of  32.00  from holding Artisan Partners Asset or generate 0.77% return on investment over 90 days.

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

Merit Medical Systems  vs.  Artisan Partners Asset

Merit Medical Systems

Risk-Adjusted Performance

0 of 100

Very Weak

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

Artisan Partners Asset

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Artisan Partners Asset are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Artisan Partners is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Merit Medical and Artisan Partners

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

The idea behind Merit Medical Systems and Artisan Partners Asset 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.