Correlation Between Merit Medical and 832696AU2

Can any of the company-specific risk be diversified away by investing in both Merit Medical and 832696AU2 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 832696AU2 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 SJM 2125 15 MAR 32, you can compare the effects of market volatilities on Merit Medical and 832696AU2 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 832696AU2. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merit Medical and 832696AU2.

Diversification Opportunities for Merit Medical and 832696AU2

-0.47

Correlation Coefficient

Merit Medical  832696AU2

Very good diversification

The 3 months correlation between Merit and 832696AU2 is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems and SJM 2125 15 MAR 32 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SJM 2125 15 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 832696AU2. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SJM 2125 15 has no effect on the direction of Merit Medical i.e., Merit Medical and 832696AU2 go up and down completely randomly.

Pair Corralation between Merit Medical and 832696AU2

Given the investment horizon of 90 days Merit Medical Systems is expected to generate 0.82 times more return on investment than 832696AU2. However, Merit Medical Systems is 1.22 times less risky than 832696AU2. It trades about 0.06 of its potential returns per unit of risk. SJM 2125 15 MAR 32 is currently generating about -0.1 per unit of risk. If you would invest  9,851  in Merit Medical Systems on September 17, 2024 and sell it today you would earn a total of  425.00  from holding Merit Medical Systems or generate 4.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	84.38%
Values	Daily Returns

Merit Medical Systems  vs.  SJM 2125 15 MAR 32

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.

SJM 2125 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SJM 2125 15 MAR 32 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for SJM 2125 15 MAR 32 investors.

Pair Trading with Merit Medical and 832696AU2

The main advantage of trading using opposite Merit Medical and 832696AU2 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merit Medical position performs unexpectedly, 832696AU2 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 832696AU2 will offset losses from the drop in 832696AU2's long position.

The idea behind Merit Medical Systems and SJM 2125 15 MAR 32 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.