Correlation Between Computer Sciences and Merck
Can any of the company-specific risk be diversified away by investing in both Computer Sciences 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 Computer Sciences and Merck into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Computer Sciences Corp and Merck Company, you can compare the effects of market volatilities on Computer Sciences 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 Computer Sciences with a short position of Merck. Check out your portfolio center. Please also check ongoing floating volatility patterns of Computer Sciences and Merck.
Diversification Opportunities for Computer Sciences and Merck
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Computer and Merck is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Computer Sciences Corp and Merck Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merck Company and Computer Sciences 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 Computer Sciences Corp 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 Computer Sciences i.e., Computer Sciences and Merck go up and down completely randomly.
Pair Corralation between Computer Sciences and Merck
If you would invest 8,825 in Merck Company on January 25, 2024 and sell it today you would earn a total of 3,875 from holding Merck Company or generate 43.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Computer Sciences Corp vs. Merck Company
Performance |
| Timeline |
| Computer Sciences Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Merck Company |
Computer Sciences and Merck Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Computer Sciences and Merck
The main advantage of trading using opposite Computer Sciences and Merck positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Computer Sciences 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.| Computer Sciences vs. Franklin Street Properties | Computer Sciences vs. Fernhill Beverage | Computer Sciences vs. Keurig Dr Pepper | Computer Sciences vs. SL Green Realty |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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