Correlation Between Merrill Lynch and ETF Securities
Can any of the company-specific risk be diversified away by investing in both Merrill Lynch and ETF Securities 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 Merrill Lynch and ETF Securities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merrill Lynch and ETF Securities, you can compare the effects of market volatilities on Merrill Lynch and ETF Securities 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 Merrill Lynch with a short position of ETF Securities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merrill Lynch and ETF Securities.
Diversification Opportunities for Merrill Lynch and ETF Securities
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Merrill and ETF is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Merrill Lynch and ETF Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETF Securities and Merrill Lynch 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 Merrill Lynch are associated (or correlated) with ETF Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETF Securities has no effect on the direction of Merrill Lynch i.e., Merrill Lynch and ETF Securities go up and down completely randomly.
Pair Corralation between Merrill Lynch and ETF Securities
If you would invest (100.00) in ETF Securities on January 26, 2024 and sell it today you would earn a total of 100.00 from holding ETF Securities or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merrill Lynch vs. ETF Securities
Performance |
| Timeline |
| Merrill Lynch |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| ETF Securities |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Merrill Lynch and ETF Securities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merrill Lynch and ETF Securities
The main advantage of trading using opposite Merrill Lynch and ETF Securities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merrill Lynch position performs unexpectedly, ETF Securities 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 ETF Securities will offset losses from the drop in ETF Securities' long position.| Merrill Lynch vs. Vanguard Total Stock | Merrill Lynch vs. SPDR SP 500 | Merrill Lynch vs. iShares Core SP | Merrill Lynch vs. Vanguard Total Bond |
| ETF Securities vs. Vanguard Total Stock | ETF Securities vs. SPDR SP 500 | ETF Securities vs. iShares Core SP | ETF Securities vs. Vanguard Total Bond |
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 the AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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