Correlation Between Journey Medical and Merck
Can any of the company-specific risk be diversified away by investing in both Journey Medical and Merck 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 Journey Medical and Merck into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Journey Medical Corp and Merck Company, you can compare the effects of market volatilities on Journey Medical and Merck 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 Journey Medical with a short position of Merck. Check out your portfolio center. Please also check ongoing floating volatility patterns of Journey Medical and Merck.
Diversification Opportunities for Journey Medical and Merck
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Journey and Merck is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Journey Medical Corp and Merck Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merck Company and Journey Medical 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 Journey Medical Corp are associated (or correlated) with Merck. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merck Company has no effect on the direction of Journey Medical i.e., Journey Medical and Merck go up and down completely randomly.
Pair Corralation between Journey Medical and Merck
Given the investment horizon of 90 days Journey Medical Corp is expected to generate 6.87 times more return on investment than Merck. However, Journey Medical is 6.87 times more volatile than Merck Company. It trades about 0.01 of its potential returns per unit of risk. Merck Company is currently generating about 0.02 per unit of risk. If you would invest 406.00 in Journey Medical Corp on February 27, 2024 and sell it today you would lose (46.00) from holding Journey Medical Corp or give up 11.33% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Journey Medical Corp vs. Merck Company
Performance |
Timeline |
Journey Medical Corp |
Merck Company |
Journey Medical and Merck Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Journey Medical and Merck
The main advantage of trading using opposite Journey Medical and Merck positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Journey Medical position performs unexpectedly, Merck 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 Merck will offset losses from the drop in Merck's long position.Journey Medical vs. China Pharma Holdings | Journey Medical vs. Halo Collective | Journey Medical vs. China SXT Pharmaceuticals | Journey Medical vs. SNDL Inc |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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