Correlation Between Merck and VictoryShares THB

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

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

Diversification Opportunities for Merck and VictoryShares THB

-0.7

Correlation Coefficient

Merck  VictoryShares THB

Excellent diversification

The 3 months correlation between Merck and VictoryShares is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and VictoryShares THB Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VictoryShares THB Mid 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 VictoryShares THB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VictoryShares THB Mid has no effect on the direction of Merck i.e., Merck and VictoryShares THB go up and down completely randomly.

Pair Corralation between Merck and VictoryShares THB

Considering the 90-day investment horizon Merck Company is expected to under-perform the VictoryShares THB. In addition to that, Merck is 1.41 times more volatile than VictoryShares THB Mid. It trades about -0.19 of its total potential returns per unit of risk. VictoryShares THB Mid is currently generating about 0.17 per unit of volatility. If you would invest  2,805  in VictoryShares THB Mid on September 5, 2024 and sell it today you would earn a total of  261.00  from holding VictoryShares THB Mid or generate 9.3% 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.  VictoryShares THB Mid

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 basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

VictoryShares THB Mid

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in VictoryShares THB Mid are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental indicators, VictoryShares THB may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Merck and VictoryShares THB

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

The idea behind Merck Company and VictoryShares THB Mid 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.