Correlation Between Merck and Money Market
Can any of the company-specific risk be diversified away by investing in both Merck and Money Market 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 Money Market into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Money Market Obligations, you can compare the effects of market volatilities on Merck and Money Market 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 Money Market. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Money Market.
Diversification Opportunities for Merck and Money Market
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Merck and Money is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Money Market Obligations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Money Market Obligations 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 Money Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Money Market Obligations has no effect on the direction of Merck i.e., Merck and Money Market go up and down completely randomly.
Pair Corralation between Merck and Money Market
Considering the 90-day investment horizon Merck Company is expected to under-perform the Money Market. In addition to that, Merck is 11.6 times more volatile than Money Market Obligations. It trades about -0.13 of its total potential returns per unit of risk. Money Market Obligations is currently generating about 0.13 per unit of volatility. If you would invest 98.00 in Money Market Obligations on September 6, 2024 and sell it today you would earn a total of 2.00 from holding Money Market Obligations or generate 2.04% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 99.2% |
Values | Daily Returns |
Merck Company vs. Money Market Obligations
Performance |
Timeline |
Merck Company |
Money Market Obligations |
Merck and Money Market Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Merck and Money Market
The main advantage of trading using opposite Merck and Money Market positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Money Market 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 Money Market will offset losses from the drop in Money Market's long position.Merck vs. Crinetics Pharmaceuticals | Merck vs. Enanta Pharmaceuticals | Merck vs. Amicus Therapeutics | Merck vs. Connect Biopharma Holdings |
Money Market vs. Vanguard Total Stock | Money Market vs. Vanguard 500 Index | Money Market vs. Vanguard Total Stock | Money Market vs. Vanguard Total Stock |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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