Correlation Between Merck and The Us
Can any of the company-specific risk be diversified away by investing in both Merck and The Us 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 The Us into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and The Government Fixed, you can compare the effects of market volatilities on Merck and The Us 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 The Us. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and The Us.
Diversification Opportunities for Merck and The Us
Very good diversification
The 3 months correlation between Merck and The is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and The Government Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Government Fixed 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 The Us. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Government Fixed has no effect on the direction of Merck i.e., Merck and The Us go up and down completely randomly.
Pair Corralation between Merck and The Us
Considering the 90-day investment horizon Merck Company is expected to under-perform the The Us. In addition to that, Merck is 5.27 times more volatile than The Government Fixed. It trades about -0.02 of its total potential returns per unit of risk. The Government Fixed is currently generating about 0.09 per unit of volatility. If you would invest 840.00 in The Government Fixed on December 18, 2024 and sell it today you would earn a total of 14.00 from holding The Government Fixed or generate 1.67% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Merck Company vs. The Government Fixed
Performance |
Timeline |
Merck Company |
Government Fixed |
Merck and The Us Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Merck and The Us
The main advantage of trading using opposite Merck and The Us positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, The Us 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 The Us will offset losses from the drop in The Us' long position.Merck vs. Aquestive Therapeutics | Merck vs. Evoke Pharma | Merck vs. Ironwood Pharmaceuticals | Merck vs. Alkermes Plc |
The Us vs. Vanguard Total Stock | The Us vs. Vanguard 500 Index | The Us vs. Vanguard Total Stock | The Us vs. Vanguard Total Stock |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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