Correlation Between Merit Medical and Omeros

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

Diversification Opportunities for Merit Medical and Omeros

0.75

Correlation Coefficient

Merit Medical  Omeros

Poor diversification

The 3 months correlation between Merit and Omeros is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems and Omeros in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Omeros 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 Omeros. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Omeros has no effect on the direction of Merit Medical i.e., Merit Medical and Omeros go up and down completely randomly.

Pair Corralation between Merit Medical and Omeros

Given the investment horizon of 90 days Merit Medical Systems is expected to under-perform the Omeros. But the stock apears to be less risky and, when comparing its historical volatility, Merit Medical Systems is 12.64 times less risky than Omeros. The stock trades about -0.05 of its potential returns per unit of risk. The Omeros is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  592.00  in Omeros on September 17, 2024 and sell it today you would earn a total of  171.00  from holding Omeros or generate 28.89% 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.  Omeros

Merit Medical Systems

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Merit Medical Systems are ranked lower than 4 (%) 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 latest stock price confusion, may contribute to short-horizon losses for the traders.

Omeros

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Omeros are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, Omeros reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Merit Medical and Omeros

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

The idea behind Merit Medical Systems and Omeros 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.