Correlation Between Black Knight and Merck
Can any of the company-specific risk be diversified away by investing in both Black Knight 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 Black Knight and Merck into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Black Knight and Merck Company, you can compare the effects of market volatilities on Black Knight 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 Black Knight with a short position of Merck. Check out your portfolio center. Please also check ongoing floating volatility patterns of Black Knight and Merck.
Diversification Opportunities for Black Knight and Merck
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Black and Merck is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Black Knight and Merck Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merck Company and Black Knight 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 Black Knight 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 Black Knight i.e., Black Knight and Merck go up and down completely randomly.
Pair Corralation between Black Knight and Merck
If you would invest 12,822 in Merck Company on December 29, 2023 and sell it today you would earn a total of 353.00 from holding Merck Company or generate 2.75% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 4.55% |
Values | Daily Returns |
Black Knight vs. Merck Company
Performance |
Timeline |
Black Knight |
Risk-Adjusted Performance
0 of 100
Low | High |
Very Weak
Merck Company |
Black Knight and Merck Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Black Knight and Merck
The main advantage of trading using opposite Black Knight and Merck positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Black Knight 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.Black Knight vs. Ambev SA ADR | Black Knight vs. Zevia Pbc | Black Knight vs. National Beverage Corp | Black Knight vs. Helmerich And Payne |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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