Correlation Between Merit Medical and CVW CleanTech
Can any of the company-specific risk be diversified away by investing in both Merit Medical and CVW CleanTech 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 CVW CleanTech 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 CVW CleanTech, you can compare the effects of market volatilities on Merit Medical and CVW CleanTech 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 CVW CleanTech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merit Medical and CVW CleanTech.
Diversification Opportunities for Merit Medical and CVW CleanTech
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Merit and CVW is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems and CVW CleanTech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVW CleanTech 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 CVW CleanTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVW CleanTech has no effect on the direction of Merit Medical i.e., Merit Medical and CVW CleanTech go up and down completely randomly.
Pair Corralation between Merit Medical and CVW CleanTech
Given the investment horizon of 90 days Merit Medical Systems is expected to generate 0.37 times more return on investment than CVW CleanTech. However, Merit Medical Systems is 2.7 times less risky than CVW CleanTech. It trades about 0.11 of its potential returns per unit of risk. CVW CleanTech is currently generating about 0.02 per unit of risk. If you would invest 8,296 in Merit Medical Systems on September 24, 2024 and sell it today you would earn a total of 1,526 from holding Merit Medical Systems or generate 18.39% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 99.21% |
Values | Daily Returns |
Merit Medical Systems vs. CVW CleanTech
Performance |
Timeline |
Merit Medical Systems |
CVW CleanTech |
Merit Medical and CVW CleanTech Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Merit Medical and CVW CleanTech
The main advantage of trading using opposite Merit Medical and CVW CleanTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merit Medical position performs unexpectedly, CVW CleanTech 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 CVW CleanTech will offset losses from the drop in CVW CleanTech's long position.Merit Medical vs. Cigna Corp | Merit Medical vs. Definitive Healthcare Corp | Merit Medical vs. Guardant Health | Merit Medical vs. Laboratory of |
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Check out your portfolio center.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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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