Correlation Between Merck and KANSAS
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By analyzing existing cross correlation between Merck Company and KANSAS CITY SOUTHN, you can compare the effects of market volatilities on Merck and KANSAS 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 KANSAS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and KANSAS.
Diversification Opportunities for Merck and KANSAS
Pay attention - limited upside
The 3 months correlation between Merck and KANSAS is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and KANSAS CITY SOUTHN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KANSAS CITY SOUTHN 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 KANSAS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KANSAS CITY SOUTHN has no effect on the direction of Merck i.e., Merck and KANSAS go up and down completely randomly.
Pair Corralation between Merck and KANSAS
Considering the 90-day investment horizon Merck Company is expected to generate 2.13 times more return on investment than KANSAS. However, Merck is 2.13 times more volatile than KANSAS CITY SOUTHN. It trades about 0.0 of its potential returns per unit of risk. KANSAS CITY SOUTHN is currently generating about -0.21 per unit of risk. If you would invest 10,165 in Merck Company on September 6, 2024 and sell it today you would lose (28.00) from holding Merck Company or give up 0.28% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 27.27% |
Values | Daily Returns |
Merck Company vs. KANSAS CITY SOUTHN
Performance |
Timeline |
Merck Company |
KANSAS CITY SOUTHN |
Merck and KANSAS Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Merck and KANSAS
The main advantage of trading using opposite Merck and KANSAS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, KANSAS 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 KANSAS will offset losses from the drop in KANSAS'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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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