Correlation Between Merit Medical and Oak View

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

Diversification Opportunities for Merit Medical and Oak View

0.62

Correlation Coefficient

Merit Medical  Oak View

Poor diversification

The 3 months correlation between Merit and Oak is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems and Oak View National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oak View National 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 Oak View. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oak View National has no effect on the direction of Merit Medical i.e., Merit Medical and Oak View go up and down completely randomly.

Pair Corralation between Merit Medical and Oak View

Given the investment horizon of 90 days Merit Medical is expected to generate 16.94 times less return on investment than Oak View. But when comparing it to its historical volatility, Merit Medical Systems is 1.13 times less risky than Oak View. It trades about 0.01 of its potential returns per unit of risk. Oak View National is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,333  in Oak View National on October 8, 2024 and sell it today you would earn a total of  157.00  from holding Oak View National or generate 11.78% return on investment over 90 days.

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

Merit Medical Systems  vs.  Oak View National

Merit Medical Systems

Risk-Adjusted Performance

0 of 100

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.

Oak View National

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Oak View National are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward-looking signals, Oak View may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Merit Medical and Oak View

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

The idea behind Merit Medical Systems and Oak View National 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.