Correlation Between Merck and Marquette National

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

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

Diversification Opportunities for Merck and Marquette National

-0.79

Correlation Coefficient

Merck  Marquette National

Pay attention - limited upside

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

Pair Corralation between Merck and Marquette National

Considering the 90-day investment horizon Merck Company is expected to under-perform the Marquette National. But the stock apears to be less risky and, when comparing its historical volatility, Merck Company is 1.01 times less risky than Marquette National. The stock trades about -0.1 of its potential returns per unit of risk. The Marquette National Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,621  in Marquette National Corp on August 30, 2024 and sell it today you would earn a total of  259.00  from holding Marquette National Corp or generate 9.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	97.62%
Values	Daily Returns

Merck Company  vs.  Marquette National Corp

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 uncertain 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.

Marquette National Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Marquette National Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Marquette National may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Merck and Marquette National

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

The idea behind Merck Company and Marquette National Corp 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.