Correlation Between Merck and Vendetta Mining
Can any of the company-specific risk be diversified away by investing in both Merck and Vendetta Mining 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 Vendetta Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Vendetta Mining Corp, you can compare the effects of market volatilities on Merck and Vendetta Mining 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 Vendetta Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Vendetta Mining.
Diversification Opportunities for Merck and Vendetta Mining
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Merck and Vendetta is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Vendetta Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vendetta Mining Corp 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 Vendetta Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vendetta Mining Corp has no effect on the direction of Merck i.e., Merck and Vendetta Mining go up and down completely randomly.
Pair Corralation between Merck and Vendetta Mining
Considering the 90-day investment horizon Merck Company is expected to under-perform the Vendetta Mining. But the stock apears to be less risky and, when comparing its historical volatility, Merck Company is 4.46 times less risky than Vendetta Mining. The stock trades about -0.06 of its potential returns per unit of risk. The Vendetta Mining Corp is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 0.76 in Vendetta Mining Corp on December 2, 2024 and sell it today you would earn a total of 0.49 from holding Vendetta Mining Corp or generate 64.47% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 96.83% |
Values | Daily Returns |
Merck Company vs. Vendetta Mining Corp
Performance |
Timeline |
Merck Company |
Vendetta Mining Corp |
Merck and Vendetta Mining Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Merck and Vendetta Mining
The main advantage of trading using opposite Merck and Vendetta Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Vendetta Mining 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 Vendetta Mining will offset losses from the drop in Vendetta Mining's long position.The idea behind Merck Company and Vendetta Mining Corp 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.Vendetta Mining vs. Granite Creek Copper | Vendetta Mining vs. Ascendant Resources | Vendetta Mining vs. Altiplano Metals | Vendetta Mining vs. Erdene Resource Development |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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