Correlation Between Merck and MQGAU

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

By analyzing existing cross correlation between Merck Company and MQGAU 5376057 23 SEP 27, you can compare the effects of market volatilities on Merck and MQGAU 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 MQGAU. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and MQGAU.

Diversification Opportunities for Merck and MQGAU

-0.74

Correlation Coefficient

Merck  MQGAU

Pay attention - limited upside

The 3 months correlation between Merck and MQGAU is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and MQGAU 5376057 23 SEP 27 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MQGAU 5376057 23 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 MQGAU. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MQGAU 5376057 23 has no effect on the direction of Merck i.e., Merck and MQGAU go up and down completely randomly.

Pair Corralation between Merck and MQGAU

Considering the 90-day investment horizon Merck Company is expected to under-perform the MQGAU. In addition to that, Merck is 13.15 times more volatile than MQGAU 5376057 23 SEP 27. It trades about -0.21 of its total potential returns per unit of risk. MQGAU 5376057 23 SEP 27 is currently generating about 0.1 per unit of volatility. If you would invest  10,029  in MQGAU 5376057 23 SEP 27 on September 18, 2024 and sell it today you would earn a total of  19.00  from holding MQGAU 5376057 23 SEP 27 or generate 0.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	33.33%
Values	Daily Returns

Merck Company  vs.  MQGAU 5376057 23 SEP 27

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 uncertain performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

MQGAU 5376057 23

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MQGAU 5376057 23 SEP 27 are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, MQGAU 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 MQGAU

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

The idea behind Merck Company and MQGAU 5376057 23 SEP 27 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.