Correlation Between Merck and Monachil Credit

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

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

Diversification Opportunities for Merck and Monachil Credit

-0.94

Correlation Coefficient

Merck  Monachil Credit

Pay attention - limited upside

The 3 months correlation between Merck and Monachil is -0.94. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Monachil Credit Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monachil Credit Income 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 Monachil Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monachil Credit Income has no effect on the direction of Merck i.e., Merck and Monachil Credit go up and down completely randomly.

Pair Corralation between Merck and Monachil Credit

Considering the 90-day investment horizon Merck Company is expected to under-perform the Monachil Credit. In addition to that, Merck is 6.91 times more volatile than Monachil Credit Income. It trades about -0.16 of its total potential returns per unit of risk. Monachil Credit Income is currently generating about 0.14 per unit of volatility. If you would invest  992.00  in Monachil Credit Income on September 12, 2024 and sell it today you would earn a total of  15.00  from holding Monachil Credit Income or generate 1.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Merck Company  vs.  Monachil Credit Income

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.

Monachil Credit Income

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Monachil Credit Income are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Monachil Credit is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Merck and Monachil Credit

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

The idea behind Merck Company and Monachil Credit Income 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.