Correlation Between Merck and GW Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Merck and GW Pharmaceuticals 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 GW Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and GW Pharmaceuticals Plc, you can compare the effects of market volatilities on Merck and GW Pharmaceuticals 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 GW Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and GW Pharmaceuticals.
Diversification Opportunities for Merck and GW Pharmaceuticals
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Merck and GWPH is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and GW Pharmaceuticals Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GW Pharmaceuticals Plc 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 GW Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GW Pharmaceuticals Plc has no effect on the direction of Merck i.e., Merck and GW Pharmaceuticals go up and down completely randomly.
Pair Corralation between Merck and GW Pharmaceuticals
If you would invest 12,574 in Merck Company on February 12, 2024 and sell it today you would earn a total of 432.00 from holding Merck Company or generate 3.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Merck Company vs. GW Pharmaceuticals Plc
Performance |
| Timeline |
| Merck Company |
| GW Pharmaceuticals Plc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Merck and GW Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and GW Pharmaceuticals
The main advantage of trading using opposite Merck and GW Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, GW Pharmaceuticals 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 GW Pharmaceuticals will offset losses from the drop in GW Pharmaceuticals' long position.| Merck vs. Dell Technologies | Merck vs. MIRA Pharmaceuticals Common | Merck vs. Planet Fitness | Merck vs. VanEck Pharmaceutical ETF |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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