Correlation Between 694308KE6 and Merit Medical

Can any of the company-specific risk be diversified away by investing in both 694308KE6 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 694308KE6 and Merit Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PCG 495 08 JUN 25 and Merit Medical Systems, you can compare the effects of market volatilities on 694308KE6 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 694308KE6 with a short position of Merit Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of 694308KE6 and Merit Medical.

Diversification Opportunities for 694308KE6 and Merit Medical

0.14

Correlation Coefficient

694308KE6  Merit Medical

Average diversification

The 3 months correlation between 694308KE6 and Merit is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding PCG 495 08 JUN 25 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 694308KE6 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 PCG 495 08 JUN 25 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 694308KE6 i.e., 694308KE6 and Merit Medical go up and down completely randomly.

Pair Corralation between 694308KE6 and Merit Medical

Assuming the 90 days trading horizon PCG 495 08 JUN 25 is expected to generate 0.4 times more return on investment than Merit Medical. However, PCG 495 08 JUN 25 is 2.48 times less risky than Merit Medical. It trades about -0.23 of its potential returns per unit of risk. Merit Medical Systems is currently generating about -0.25 per unit of risk. If you would invest  9,991  in PCG 495 08 JUN 25 on September 23, 2024 and sell it today you would lose (252.00) from holding PCG 495 08 JUN 25 or give up 2.52% of portfolio value over 90 days.

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

PCG 495 08 JUN 25  vs.  Merit Medical Systems

PCG 495 08

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PCG 495 08 JUN 25 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 694308KE6 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Merit Medical Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Merit Medical Systems has generated negative risk-adjusted returns adding no value to investors with long positions. 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 694308KE6 and Merit Medical

The main advantage of trading using opposite 694308KE6 and Merit Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 694308KE6 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 PCG 495 08 JUN 25 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.

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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.