Correlation Between Black Knight and Merck

Specify exactly 2 symbols:
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 Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy4.55%
ValuesDaily Returns

Black Knight  vs.  Merck Company

 Performance 
       Timeline  
Black Knight 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Black Knight has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward-looking signals, Black Knight is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.
Merck Company 

Risk-Adjusted Performance

21 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Merck Company are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Merck disclosed solid returns over the last few months and may actually be approaching a breakup point.

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.
The idea behind Black Knight 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 the Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.

Other Complementary Tools

Crypto Correlations
Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins
Odds Of Bankruptcy
Get analysis of equity chance of financial distress in the next 2 years
ETFs
Find actively traded Exchange Traded Funds (ETF) from around the world
Commodity Directory
Find actively traded commodities issued by global exchanges
ETF Categories
List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments
Balance Of Power
Check stock momentum by analyzing Balance Of Power indicator and other technical ratios
Stock Tickers
Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites
AI Investment Finder
Use AI to screen and filter profitable investment opportunities