Correlation Between 958102AQ8 and Merit Medical

Can any of the company-specific risk be diversified away by investing in both 958102AQ8 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 958102AQ8 and Merit Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between WDC 285 01 FEB 29 and Merit Medical Systems, you can compare the effects of market volatilities on 958102AQ8 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 958102AQ8 with a short position of Merit Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of 958102AQ8 and Merit Medical.

Diversification Opportunities for 958102AQ8 and Merit Medical

0.3

Correlation Coefficient

958102AQ8  Merit Medical

Weak diversification

The 3 months correlation between 958102AQ8 and Merit is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding WDC 285 01 FEB 29 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 958102AQ8 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 WDC 285 01 FEB 29 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 958102AQ8 i.e., 958102AQ8 and Merit Medical go up and down completely randomly.

Pair Corralation between 958102AQ8 and Merit Medical

Assuming the 90 days trading horizon 958102AQ8 is expected to generate 11.91 times less return on investment than Merit Medical. But when comparing it to its historical volatility, WDC 285 01 FEB 29 is 1.45 times less risky than Merit Medical. It trades about 0.01 of its potential returns per unit of risk. Merit Medical Systems is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  7,023  in Merit Medical Systems on October 11, 2024 and sell it today you would earn a total of  2,791  from holding Merit Medical Systems or generate 39.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.35%
Values	Daily Returns

WDC 285 01 FEB 29  vs.  Merit Medical Systems

WDC 285 01

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WDC 285 01 FEB 29 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for WDC 285 01 FEB 29 investors.

Merit Medical Systems

Risk-Adjusted Performance

4 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Merit Medical Systems are ranked lower than 4 (%) 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 958102AQ8 and Merit Medical

The main advantage of trading using opposite 958102AQ8 and Merit Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 958102AQ8 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 WDC 285 01 FEB 29 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.