Correlation Between Merck and Cano Health

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

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

Diversification Opportunities for Merck and Cano Health

-0.59

Correlation Coefficient

Merck  Cano Health

Excellent diversification

The 3 months correlation between Merck and Cano is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Cano Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cano Health 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 Cano Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cano Health has no effect on the direction of Merck i.e., Merck and Cano Health go up and down completely randomly.

Pair Corralation between Merck and Cano Health

If you would invest  137.00  in Cano Health on September 12, 2024 and sell it today you would earn a total of  0.00  from holding Cano Health or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.59%
Values	Daily Returns

Merck Company  vs.  Cano Health

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.

Cano Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cano Health has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Cano Health is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Merck and Cano Health

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

The idea behind Merck Company and Cano Health 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.