Correlation Between Columbia Seligman and Merck
Can any of the company-specific risk be diversified away by investing in both Columbia Seligman 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 Columbia Seligman and Merck into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Columbia Seligman Munications and Merck Company, you can compare the effects of market volatilities on Columbia Seligman 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 Columbia Seligman with a short position of Merck. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Seligman and Merck.
Diversification Opportunities for Columbia Seligman and Merck
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Columbia and Merck is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Seligman Munications and Merck Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merck Company and Columbia Seligman 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 Columbia Seligman Munications 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 Columbia Seligman i.e., Columbia Seligman and Merck go up and down completely randomly.
Pair Corralation between Columbia Seligman and Merck
Assuming the 90 days horizon Columbia Seligman is expected to generate 2.38 times less return on investment than Merck. In addition to that, Columbia Seligman is 1.32 times more volatile than Merck Company. It trades about 0.05 of its total potential returns per unit of risk. Merck Company is currently generating about 0.17 per unit of volatility. 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 | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Columbia Seligman Munications vs. Merck Company
Performance |
Timeline |
Columbia Seligman |
Merck Company |
Columbia Seligman and Merck Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Columbia Seligman and Merck
The main advantage of trading using opposite Columbia Seligman and Merck positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbia Seligman 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.Columbia Seligman vs. Red Oak Technology | Columbia Seligman vs. Live Oak Health | Columbia Seligman vs. HUMANA INC | Columbia Seligman vs. Aquagold International |
Merck vs. Dell Technologies | Merck vs. MIRA Pharmaceuticals Common | Merck vs. Planet Fitness | Merck vs. VanEck Pharmaceutical ETF |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities |