Correlation Between Merck and ShiftPixy
Can any of the company-specific risk be diversified away by investing in both Merck and ShiftPixy 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 ShiftPixy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and ShiftPixy, you can compare the effects of market volatilities on Merck and ShiftPixy 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 ShiftPixy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and ShiftPixy.
Diversification Opportunities for Merck and ShiftPixy
Poor diversification
The 3 months correlation between Merck and ShiftPixy is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and ShiftPixy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ShiftPixy 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 ShiftPixy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ShiftPixy has no effect on the direction of Merck i.e., Merck and ShiftPixy go up and down completely randomly.
Pair Corralation between Merck and ShiftPixy
Considering the 90-day investment horizon Merck Company is expected to generate 0.08 times more return on investment than ShiftPixy. However, Merck Company is 12.19 times less risky than ShiftPixy. It trades about -0.2 of its potential returns per unit of risk. ShiftPixy is currently generating about -0.17 per unit of risk. If you would invest 11,796 in Merck Company on September 14, 2024 and sell it today you would lose (1,671) from holding Merck Company or give up 14.17% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 49.21% |
Values | Daily Returns |
Merck Company vs. ShiftPixy
Performance |
Timeline |
Merck Company |
ShiftPixy |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Merck and ShiftPixy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Merck and ShiftPixy
The main advantage of trading using opposite Merck and ShiftPixy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, ShiftPixy 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 ShiftPixy will offset losses from the drop in ShiftPixy's long position.Merck vs. Emergent Biosolutions | Merck vs. Bausch Health Companies | Merck vs. Neurocrine Biosciences | Merck vs. Teva Pharma Industries |
ShiftPixy vs. GEE Group | ShiftPixy vs. Hire Technologies | ShiftPixy vs. The Caldwell Partners | ShiftPixy vs. Trucept |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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