Correlation Between Uber Technologies and Merck

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

Diversification Opportunities for Uber Technologies and Merck

-0.72
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Uber Technologies and Merck is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Uber Technologies and Merck Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merck Company and Uber Technologies 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 Uber Technologies 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 Uber Technologies i.e., Uber Technologies and Merck go up and down completely randomly.

Pair Corralation between Uber Technologies and Merck

Given the investment horizon of 90 days Uber Technologies is expected to under-perform the Merck. In addition to that, Uber Technologies is 2.52 times more volatile than Merck Company. It trades about -0.12 of its total potential returns per unit of risk. Merck Company is currently generating about 0.11 per unit of volatility. If you would invest  8,918  in Merck Company on April 4, 2022 and sell it today you would earn a total of  324.00  from holding Merck Company or generate 3.63% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Uber Technologies  vs.  Merck Company

 Performance (%) 
      Timeline 
Uber Technologies 
Uber Technologies Performance
0 of 100
Over the last 90 days Uber Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Even with sluggish performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in August 2022. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Uber Technologies Price Channel

Merck Company 
Merck Performance
9 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Merck Company are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Merck may actually be approaching a critical reversion point that can send shares even higher in August 2022.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0299
Payout Ratio
0.39
Last Split Factor
1048:1000
Forward Annual Dividend Rate
2.76
Dividend Date
2022-07-08
Ex Dividend Date
2022-06-14
Last Split Date
2021-06-03

Merck Price Channel

Uber Technologies and Merck Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Uber Technologies and Merck

The main advantage of trading using opposite Uber Technologies and Merck positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Uber Technologies 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.

Uber Technologies

Pair trading matchups for Uber Technologies

The idea behind Uber Technologies 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.
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.

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