Correlation Between Merck and Big Lots

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Merck and Big Lots 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 Big Lots into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Big Lots, you can compare the effects of market volatilities on Merck and Big Lots 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 Big Lots. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Big Lots.

Diversification Opportunities for Merck and Big Lots

0.4
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Merck and Big Lots is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Big Lots in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big Lots 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 Big Lots. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big Lots has no effect on the direction of Merck i.e., Merck and Big Lots go up and down completely randomly.

Pair Corralation between Merck and Big Lots

Considering the 90-day investment horizon Merck Company is expected to generate 0.3 times more return on investment than Big Lots. However, Merck Company is 3.37 times less risky than Big Lots. It trades about 0.02 of its potential returns per unit of risk. Big Lots is currently generating about -0.34 per unit of risk. If you would invest  8,573  in Merck Company on July 5, 2022 and sell it today you would earn a total of  39.00  from holding Merck Company or generate 0.45% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Merck Company  vs.  Big Lots

 Performance (%) 
       Timeline  
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

Big Lots 
Big Lots Performance
0 of 100
Over the last 90 days Big Lots has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's forward indicators remain rather sound which may send shares a bit higher in November 2022. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Big Lots Price Channel

Merck and Big Lots Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Merck and Big Lots

The main advantage of trading using opposite Merck and Big Lots positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Big Lots 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 Big Lots will offset losses from the drop in Big Lots' long position.
Merck vs. Amazon Inc
The idea behind Merck Company and Big Lots 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.
Big Lots 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

Other Complementary Tools

Pair Correlation
Compare performance and examine fundamental relationship between any two equity instruments
Go
Portfolio Manager
State of the art Portfolio Manager to monitor and improve performance of your invested capital
Go
Headlines Timeline
Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity
Go
Alpha Finder
Use alpha and beta coefficients to find investment opportunities after accounting for the risk
Go
Fund Screener
Find actively-traded funds from around the world traded on over 30 global exchanges
Go
Volatility Analysis
Get historical volatility and risk analysis based on latest market data
Go
Companies Directory
Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals
Go
Stock Screener
Find equities using custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook.
Go