Correlation Between Merck and Bausch
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By analyzing existing cross correlation between Merck Company and Bausch Health Companies, you can compare the effects of market volatilities on Merck and Bausch 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 Bausch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Bausch.
Diversification Opportunities for Merck and Bausch
Excellent diversification
The 3 months correlation between Merck and Bausch is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Bausch Health Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bausch Health Companies 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 Bausch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bausch Health Companies has no effect on the direction of Merck i.e., Merck and Bausch go up and down completely randomly.
Pair Corralation between Merck and Bausch
Considering the 90-day investment horizon Merck is expected to generate 774.75 times less return on investment than Bausch. But when comparing it to its historical volatility, Merck Company is 42.09 times less risky than Bausch. It trades about 0.0 of its potential returns per unit of risk. Bausch Health Companies is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 7,138 in Bausch Health Companies on September 7, 2024 and sell it today you would lose (738.00) from holding Bausch Health Companies or give up 10.34% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 76.1% |
Values | Daily Returns |
Merck Company vs. Bausch Health Companies
Performance |
Timeline |
Merck Company |
Bausch Health Companies |
Merck and Bausch Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Merck and Bausch
The main advantage of trading using opposite Merck and Bausch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Bausch 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 Bausch will offset losses from the drop in Bausch's long position.Merck vs. Stepstone Group | Merck vs. American Funds 2050 | Merck vs. UbiSoft Entertainment | Merck vs. Coca Cola Consolidated |
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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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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