Correlation Between Blackrock and Merck

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Can any of the company-specific risk be diversified away by investing in both Blackrock 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 Blackrock and Merck into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Blackrock and Merck Company, you can compare the effects of market volatilities on Blackrock 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 Blackrock with a short position of Merck. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock and Merck.

Diversification Opportunities for Blackrock and Merck

-0.02
  Correlation Coefficient

Good diversification

The 3 months correlation between Blackrock and Merck is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock and Merck Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merck Company and Blackrock 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 Blackrock 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 Blackrock i.e., Blackrock and Merck go up and down completely randomly.

Pair Corralation between Blackrock and Merck

Considering the 90-day investment horizon Blackrock is expected to under-perform the Merck. In addition to that, Blackrock is 1.3 times more volatile than Merck Company. It trades about 0.0 of its total potential returns per unit of risk. Merck Company is currently generating about 0.04 per unit of volatility. If you would invest  7,113  in Merck Company on July 8, 2022 and sell it today you would earn a total of  1,631  from holding Merck Company or generate 22.93% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Blackrock  vs.  Merck Company

 Performance (%) 
       Timeline  
Blackrock 
Blackrock Performance
0 of 100
Over the last 90 days Blackrock has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong essential indicators, Blackrock is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Blackrock Price Channel

Merck Company 
Merck Performance
0 of 100
Over the last 90 days Merck Company has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Merck is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Merck Price Channel

Blackrock and Merck Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Blackrock and Merck

The main advantage of trading using opposite Blackrock and Merck positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackrock 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.
Blackrock vs. Boeing Company
The idea behind Blackrock and Merck Company 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.
Merck vs. Amazon 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.

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