Correlation Between Merit Medical and ReWalk Robotics

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

Diversification Opportunities for Merit Medical and ReWalk Robotics

-0.27

Correlation Coefficient

Merit Medical  ReWalk Robotics

Very good diversification

The 3 months correlation between Merit and ReWalk is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems and ReWalk Robotics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ReWalk Robotics 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 ReWalk Robotics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ReWalk Robotics has no effect on the direction of Merit Medical i.e., Merit Medical and ReWalk Robotics go up and down completely randomly.

Pair Corralation between Merit Medical and ReWalk Robotics

Given the investment horizon of 90 days Merit Medical is expected to generate 3.87 times less return on investment than ReWalk Robotics. But when comparing it to its historical volatility, Merit Medical Systems is 6.55 times less risky than ReWalk Robotics. It trades about 0.08 of its potential returns per unit of risk. ReWalk Robotics is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  186.00  in ReWalk Robotics on December 28, 2024 and sell it today you would lose (3.00) from holding ReWalk Robotics or give up 1.61% of portfolio value over 90 days.

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

Merit Medical Systems  vs.  ReWalk Robotics

Merit Medical Systems

Risk-Adjusted Performance

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. Despite fairly weak basic indicators, Merit Medical may actually be approaching a critical reversion point that can send shares even higher in April 2025.

ReWalk Robotics

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ReWalk Robotics are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, ReWalk Robotics exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Merit Medical and ReWalk Robotics

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

The idea behind Merit Medical Systems and ReWalk Robotics 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.

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 Transaction History module to view history of all your transactions and understand their impact on performance.