Correlation Between Merck and Macys

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

Diversification Opportunities for Merck and Macys

0.32
  Correlation Coefficient

Weak diversification

The 3 months correlation between Merck and Macys is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Macys Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macys Inc 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 Macys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macys Inc has no effect on the direction of Merck i.e., Merck and Macys go up and down completely randomly.

Pair Corralation between Merck and Macys

Considering the 90-day investment horizon Merck Company is expected to generate 0.6 times more return on investment than Macys. However, Merck Company is 1.68 times less risky than Macys. It trades about -0.06 of its potential returns per unit of risk. Macys Inc is currently generating about -0.3 per unit of risk. If you would invest  8,855  in Merck Company on June 27, 2022 and sell it today you would lose (177.00)  from holding Merck Company or give up 2.0% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Merck Company  vs.  Macys Inc

 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 latest sluggish performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Merck Price Channel

Macys Inc 
Macys Performance
0 of 100
Over the last 90 days Macys Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's primary indicators remain relatively steady which may send shares a bit higher in October 2022. The new chaos may also be a sign of medium-term up-swing for the company stakeholders.

Macys Price Channel

Merck and Macys Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Merck and Macys

The main advantage of trading using opposite Merck and Macys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Macys 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 Macys will offset losses from the drop in Macys' long position.
Merck vs. Sigma Lithium Corp
The idea behind Merck Company and Macys Inc 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.
Macys vs. Industrias Bachoco SA
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.

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