Correlation Between Merck and 126650DT4

Can any of the company-specific risk be diversified away by investing in both Merck and 126650DT4 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 126650DT4 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Merck Company and CVS 5125 21 FEB 30, you can compare the effects of market volatilities on Merck and 126650DT4 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 126650DT4. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and 126650DT4.

Diversification Opportunities for Merck and 126650DT4

-0.02

Correlation Coefficient

Merck  126650DT4

Good diversification

The 3 months correlation between Merck and 126650DT4 is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and CVS 5125 21 FEB 30 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS 5125 21 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 126650DT4. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVS 5125 21 has no effect on the direction of Merck i.e., Merck and 126650DT4 go up and down completely randomly.

Pair Corralation between Merck and 126650DT4

Considering the 90-day investment horizon Merck Company is expected to under-perform the 126650DT4. In addition to that, Merck is 1.92 times more volatile than CVS 5125 21 FEB 30. It trades about -0.18 of its total potential returns per unit of risk. CVS 5125 21 FEB 30 is currently generating about 0.0 per unit of volatility. If you would invest  10,010  in CVS 5125 21 FEB 30 on November 20, 2024 and sell it today you would lose (41.00) from holding CVS 5125 21 FEB 30 or give up 0.41% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.78%
Values	Daily Returns

Merck Company  vs.  CVS 5125 21 FEB 30

Merck Company

Risk-Adjusted Performance

Very Weak

Over the last 90 days Merck Company has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in March 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

CVS 5125 21

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CVS 5125 21 FEB 30 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 126650DT4 is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Merck and 126650DT4

The main advantage of trading using opposite Merck and 126650DT4 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, 126650DT4 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 126650DT4 will offset losses from the drop in 126650DT4's long position.

The idea behind Merck Company and CVS 5125 21 FEB 30 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.