Correlation Between Merck and JOHNSON
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By analyzing existing cross correlation between Merck Company and JOHNSON JOHNSON 495, you can compare the effects of market volatilities on Merck and JOHNSON 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 JOHNSON. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and JOHNSON.
Diversification Opportunities for Merck and JOHNSON
Almost no diversification
The 3 months correlation between Merck and JOHNSON is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and JOHNSON JOHNSON 495 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JOHNSON JOHNSON 495 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 JOHNSON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JOHNSON JOHNSON 495 has no effect on the direction of Merck i.e., Merck and JOHNSON go up and down completely randomly.
Pair Corralation between Merck and JOHNSON
Considering the 90-day investment horizon Merck Company is expected to under-perform the JOHNSON. In addition to that, Merck is 1.82 times more volatile than JOHNSON JOHNSON 495. It trades about -0.19 of its total potential returns per unit of risk. JOHNSON JOHNSON 495 is currently generating about -0.13 per unit of volatility. If you would invest 10,768 in JOHNSON JOHNSON 495 on September 5, 2024 and sell it today you would lose (559.00) from holding JOHNSON JOHNSON 495 or give up 5.19% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 96.88% |
Values | Daily Returns |
Merck Company vs. JOHNSON JOHNSON 495
Performance |
Timeline |
Merck Company |
JOHNSON JOHNSON 495 |
Merck and JOHNSON Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Merck and JOHNSON
The main advantage of trading using opposite Merck and JOHNSON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, JOHNSON 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 JOHNSON will offset losses from the drop in JOHNSON's long position.Merck vs. Crinetics Pharmaceuticals | Merck vs. Enanta Pharmaceuticals | Merck vs. Amicus Therapeutics | Merck vs. Connect Biopharma Holdings |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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