Correlation Between Merck and Amg Managers

Can any of the company-specific risk be diversified away by investing in both Merck and Amg Managers 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 Merck and Amg Managers into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Merck Company and Amg Managers Pictet, you can compare the effects of market volatilities on Merck and Amg Managers 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 Merck with a short position of Amg Managers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Amg Managers.

Diversification Opportunities for Merck and Amg Managers

-0.62

Correlation Coefficient

Merck  Amg Managers

Excellent diversification

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

Pair Corralation between Merck and Amg Managers

Considering the 90-day investment horizon Merck Company is expected to under-perform the Amg Managers. In addition to that, Merck is 4.73 times more volatile than Amg Managers Pictet. It trades about -0.12 of its total potential returns per unit of risk. Amg Managers Pictet is currently generating about -0.07 per unit of volatility. If you would invest  1,072  in Amg Managers Pictet on September 3, 2024 and sell it today you would lose (17.00) from holding Amg Managers Pictet or give up 1.59% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	56.0%
Values	Daily Returns

Merck Company  vs.  Amg Managers Pictet

Merck Company

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Merck Company has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Amg Managers Pictet

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amg Managers Pictet has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Amg Managers is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Merck and Amg Managers

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

The idea behind Merck Company and Amg Managers Pictet 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.