Correlation Between Merit Medical and Everspin Technologies

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

Diversification Opportunities for Merit Medical and Everspin Technologies

-0.19

Correlation Coefficient

Merit Medical  Everspin Technologies

Good diversification

The 3 months correlation between Merit and Everspin is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems and Everspin Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Everspin Technologies 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 Everspin Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Everspin Technologies has no effect on the direction of Merit Medical i.e., Merit Medical and Everspin Technologies go up and down completely randomly.

Pair Corralation between Merit Medical and Everspin Technologies

Given the investment horizon of 90 days Merit Medical Systems is expected to under-perform the Everspin Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Merit Medical Systems is 1.48 times less risky than Everspin Technologies. The stock trades about -0.24 of its potential returns per unit of risk. The Everspin Technologies is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  639.00  in Everspin Technologies on October 10, 2024 and sell it today you would earn a total of  11.00  from holding Everspin Technologies or generate 1.72% 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.  Everspin Technologies

Merit Medical Systems

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Merit Medical Systems are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Everspin Technologies

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Everspin Technologies are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Everspin Technologies 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 Everspin Technologies

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

The idea behind Merit Medical Systems and Everspin Technologies 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.