Correlation Between Merck and Nuveen Preferred

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

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

Diversification Opportunities for Merck and Nuveen Preferred

-0.5

Correlation Coefficient

Merck  Nuveen Preferred

Very good diversification

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

Pair Corralation between Merck and Nuveen Preferred

If you would invest  641.00  in Nuveen Preferred Securites on September 13, 2024 and sell it today you would earn a total of  0.00  from holding Nuveen Preferred Securites or generate 0.0% return on investment over 90 days.

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

Merck Company  vs.  Nuveen Preferred Securites

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.

Nuveen Preferred Sec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nuveen Preferred Securites has generated negative risk-adjusted returns adding no value to fund investors. In spite of comparatively stable basic indicators, Nuveen Preferred is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Merck and Nuveen Preferred

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

The idea behind Merck Company and Nuveen Preferred Securites 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.