Correlation Between Merck and Fidelity Disruptive

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

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

Diversification Opportunities for Merck and Fidelity Disruptive

-0.5

Correlation Coefficient

Merck  Fidelity Disruptive

Very good diversification

The 3 months correlation between Merck and Fidelity is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Fidelity Disruptive Automation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Disruptive 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 Fidelity Disruptive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Disruptive has no effect on the direction of Merck i.e., Merck and Fidelity Disruptive go up and down completely randomly.

Pair Corralation between Merck and Fidelity Disruptive

Considering the 90-day investment horizon Merck Company is expected to under-perform the Fidelity Disruptive. In addition to that, Merck is 1.3 times more volatile than Fidelity Disruptive Automation. It trades about -0.1 of its total potential returns per unit of risk. Fidelity Disruptive Automation is currently generating about 0.08 per unit of volatility. If you would invest  2,720  in Fidelity Disruptive Automation on October 8, 2024 and sell it today you would earn a total of  115.00  from holding Fidelity Disruptive Automation or generate 4.23% return on investment over 90 days.

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

Merck Company  vs.  Fidelity Disruptive Automation

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 abnormal 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.

Fidelity Disruptive

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Disruptive Automation are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Fidelity Disruptive is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Merck and Fidelity Disruptive

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

The idea behind Merck Company and Fidelity Disruptive Automation 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.