Correlation Between Merck and ING Groep

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

Diversification Opportunities for Merck and ING Groep

-0.2
  Correlation Coefficient

Good diversification

The 3 months correlation between Merck and ING Groep is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and ING Groep NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ING Groep NV 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 ING Groep. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ING Groep NV has no effect on the direction of Merck i.e., Merck and ING Groep go up and down completely randomly.

Pair Corralation between Merck and ING Groep

Considering the 90-day investment horizon Merck is expected to generate 2.05 times less return on investment than ING Groep. But when comparing it to its historical volatility, Merck Company is 1.89 times less risky than ING Groep. It trades about 0.03 of its potential returns per unit of risk. ING Groep NV is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  708.00  in ING Groep NV on May 19, 2022 and sell it today you would earn a total of  240.00  from holding ING Groep NV or generate 33.9% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Merck Company  vs.  ING Groep NV

 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

ING Groep NV 
ING Groep Performance
0 of 100
Over the last 90 days ING Groep NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, ING Groep is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

ING Groep Price Channel

Merck and ING Groep Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Merck and ING Groep

The main advantage of trading using opposite Merck and ING Groep positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, ING Groep 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 ING Groep will offset losses from the drop in ING Groep's long position.
The idea behind Merck Company and ING Groep NV 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.
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 Price Transformation module to use Price Transformation models to analyze depth of different equity instruments across global markets.

Other Complementary Tools

Portfolio Holdings
Check your current holdings and cash postion to detemine if your portfolio needs rebalancing
Go
Crypto Correlations
Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins
Go
Instant Ratings
Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance
Go
Price Transformation
Use Price Transformation models to analyze depth of different equity instruments across global markets
Go
Headlines Timeline
Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity
Go