Correlation Between Merck and Vista Energy,

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

By analyzing existing cross correlation between Merck Company and Vista Energy, SAB, you can compare the effects of market volatilities on Merck and Vista Energy, 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 Vista Energy,. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Vista Energy,.

Diversification Opportunities for Merck and Vista Energy,

-0.79

Correlation Coefficient

Merck  Vista Energy,

Pay attention - limited upside

The 3 months correlation between Merck and Vista is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Vista Energy, SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vista Energy, SAB 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 Vista Energy,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vista Energy, SAB has no effect on the direction of Merck i.e., Merck and Vista Energy, go up and down completely randomly.

Pair Corralation between Merck and Vista Energy,

Assuming the 90 days trading horizon Merck Company is expected to under-perform the Vista Energy,. But the stock apears to be less risky and, when comparing its historical volatility, Merck Company is 2.05 times less risky than Vista Energy,. The stock trades about -0.35 of its potential returns per unit of risk. The Vista Energy, SAB is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,640  in Vista Energy, SAB on September 14, 2024 and sell it today you would earn a total of  355.00  from holding Vista Energy, SAB or generate 21.65% return on investment over 90 days.

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

Merck Company  vs.  Vista Energy, SAB

Merck Company

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Merck Company has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward-looking signals remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Vista Energy, SAB

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vista Energy, SAB are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Vista Energy, sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Merck and Vista Energy,

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

The idea behind Merck Company and Vista Energy, SAB 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.