Correlation Between Merck and Blackrock Advantage

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

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

Diversification Opportunities for Merck and Blackrock Advantage

-0.77

Correlation Coefficient

Merck  Blackrock Advantage

Pay attention - limited upside

The 3 months correlation between Merck and Blackrock is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Blackrock Advantage Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Advantage Large 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 Blackrock Advantage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Advantage Large has no effect on the direction of Merck i.e., Merck and Blackrock Advantage go up and down completely randomly.

Pair Corralation between Merck and Blackrock Advantage

Considering the 90-day investment horizon Merck Company is expected to under-perform the Blackrock Advantage. In addition to that, Merck is 2.12 times more volatile than Blackrock Advantage Large. It trades about -0.16 of its total potential returns per unit of risk. Blackrock Advantage Large is currently generating about 0.2 per unit of volatility. If you would invest  2,915  in Blackrock Advantage Large on September 12, 2024 and sell it today you would earn a total of  216.00  from holding Blackrock Advantage Large or generate 7.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Merck Company  vs.  Blackrock Advantage Large

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 latest weak performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Blackrock Advantage Large

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Advantage Large are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile essential indicators, Blackrock Advantage may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Merck and Blackrock Advantage

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

The idea behind Merck Company and Blackrock Advantage Large 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.