Correlation Between Shimmick Common and Merit Medical

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

By analyzing existing cross correlation between Shimmick Common and Merit Medical Systems, you can compare the effects of market volatilities on Shimmick Common and Merit Medical 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 Shimmick Common with a short position of Merit Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shimmick Common and Merit Medical.

Diversification Opportunities for Shimmick Common and Merit Medical

0.26

Correlation Coefficient

Shimmick Common  Merit Medical

Modest diversification

The 3 months correlation between Shimmick and Merit is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Shimmick Common and Merit Medical Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merit Medical Systems and Shimmick Common 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 Shimmick Common are associated (or correlated) with Merit Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merit Medical Systems has no effect on the direction of Shimmick Common i.e., Shimmick Common and Merit Medical go up and down completely randomly.

Pair Corralation between Shimmick Common and Merit Medical

Given the investment horizon of 90 days Shimmick Common is expected to generate 4.96 times more return on investment than Merit Medical. However, Shimmick Common is 4.96 times more volatile than Merit Medical Systems. It trades about 0.27 of its potential returns per unit of risk. Merit Medical Systems is currently generating about -0.24 per unit of risk. If you would invest  213.00  in Shimmick Common on September 26, 2024 and sell it today you would earn a total of  84.00  from holding Shimmick Common or generate 39.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Shimmick Common  vs.  Merit Medical Systems

Shimmick Common

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Shimmick Common are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady forward indicators, Shimmick Common displayed solid returns over the last few months and may actually be approaching a breakup point.

Merit Medical Systems

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Merit Medical Systems are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Merit Medical is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Shimmick Common and Merit Medical

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

The idea behind Shimmick Common and Merit Medical Systems 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.

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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.