Correlation Between Merck and Mccoy Global

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

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

Diversification Opportunities for Merck and Mccoy Global

-0.78

Correlation Coefficient

Merck  Mccoy Global

Pay attention - limited upside

The 3 months correlation between Merck and Mccoy is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Mccoy Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mccoy Global 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 Mccoy Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mccoy Global has no effect on the direction of Merck i.e., Merck and Mccoy Global go up and down completely randomly.

Pair Corralation between Merck and Mccoy Global

Considering the 90-day investment horizon Merck Company is expected to under-perform the Mccoy Global. But the stock apears to be less risky and, when comparing its historical volatility, Merck Company is 3.07 times less risky than Mccoy Global. The stock trades about -0.16 of its potential returns per unit of risk. The Mccoy Global is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  145.00  in Mccoy Global on September 3, 2024 and sell it today you would earn a total of  67.00  from holding Mccoy Global or generate 46.21% 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.  Mccoy Global

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 unsteady 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.

Mccoy Global

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mccoy Global are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Mccoy Global reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Merck and Mccoy Global

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

The idea behind Merck Company and Mccoy Global 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.