Correlation Between Merck and Dalrada Financial

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

By analyzing existing cross correlation between Merck Company and Dalrada Financial Corp, you can compare the effects of market volatilities on Merck and Dalrada Financial 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 Dalrada Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Dalrada Financial.

Diversification Opportunities for Merck and Dalrada Financial

0.92

Correlation Coefficient

Merck  Dalrada Financial

Almost no diversification

The 3 months correlation between Merck and Dalrada is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Dalrada Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dalrada Financial Corp 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 Dalrada Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dalrada Financial Corp has no effect on the direction of Merck i.e., Merck and Dalrada Financial go up and down completely randomly.

Pair Corralation between Merck and Dalrada Financial

Considering the 90-day investment horizon Merck is expected to generate 51.05 times less return on investment than Dalrada Financial. But when comparing it to its historical volatility, Merck Company is 10.51 times less risky than Dalrada Financial. It trades about 0.02 of its potential returns per unit of risk. Dalrada Financial Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  6.40  in Dalrada Financial Corp on September 12, 2024 and sell it today you would earn a total of  0.20  from holding Dalrada Financial Corp or generate 3.13% return on investment over 90 days.

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

Merck Company  vs.  Dalrada Financial Corp

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 weak 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.

Dalrada Financial Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dalrada Financial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Merck and Dalrada Financial

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

The idea behind Merck Company and Dalrada Financial Corp 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.