Correlation Between Merck and Genesis Unicorn

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

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

Diversification Opportunities for Merck and Genesis Unicorn

-0.38

Correlation Coefficient

Merck  Genesis Unicorn

Very good diversification

The 3 months correlation between Merck and Genesis is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Genesis Unicorn Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genesis Unicorn Capital 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 Genesis Unicorn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genesis Unicorn Capital has no effect on the direction of Merck i.e., Merck and Genesis Unicorn go up and down completely randomly.

Pair Corralation between Merck and Genesis Unicorn

If you would invest  1,047  in Genesis Unicorn Capital on September 12, 2024 and sell it today you would earn a total of  0.00  from holding Genesis Unicorn Capital or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

Merck Company  vs.  Genesis Unicorn Capital

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.

Genesis Unicorn Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Genesis Unicorn Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Genesis Unicorn is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Merck and Genesis Unicorn

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

The idea behind Merck Company and Genesis Unicorn Capital 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.