Correlation Between Merit Medical and Super League

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

Diversification Opportunities for Merit Medical and Super League

-0.48

Correlation Coefficient

Merit Medical  Super League

Very good diversification

The 3 months correlation between Merit and Super is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems and Super League Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Super League Enterprise 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 Super League. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Super League Enterprise has no effect on the direction of Merit Medical i.e., Merit Medical and Super League go up and down completely randomly.

Pair Corralation between Merit Medical and Super League

Given the investment horizon of 90 days Merit Medical Systems is expected to under-perform the Super League. But the stock apears to be less risky and, when comparing its historical volatility, Merit Medical Systems is 5.05 times less risky than Super League. The stock trades about -0.24 of its potential returns per unit of risk. The Super League Enterprise is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  57.00  in Super League Enterprise on October 9, 2024 and sell it today you would earn a total of  17.00  from holding Super League Enterprise or generate 29.82% return on investment over 90 days.

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

Merit Medical Systems  vs.  Super League Enterprise

Merit Medical Systems

Risk-Adjusted Performance

0 of 100

Very 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.

Super League Enterprise

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Super League Enterprise has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's essential indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Merit Medical and Super League

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

The idea behind Merit Medical Systems and Super League Enterprise 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.