Correlation Between DoubleVerify Holdings and Merck

Can any of the company-specific risk be diversified away by investing in both DoubleVerify Holdings 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 DoubleVerify Holdings and Merck into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DoubleVerify Holdings and Merck Company, you can compare the effects of market volatilities on DoubleVerify Holdings 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 DoubleVerify Holdings with a short position of Merck. Check out your portfolio center. Please also check ongoing floating volatility patterns of DoubleVerify Holdings and Merck.

Diversification Opportunities for DoubleVerify Holdings and Merck

-0.72

Correlation Coefficient

DoubleVerify Holdings Merck

Pay attention - limited upside

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

Pair Corralation between DoubleVerify Holdings and Merck

Allowing for the 90-day total investment horizon DoubleVerify Holdings is expected to generate 1.72 times more return on investment than Merck. However, DoubleVerify Holdings is 1.72 times more volatile than Merck Company. It trades about 0.1 of its potential returns per unit of risk. Merck Company is currently generating about -0.1 per unit of risk. If you would invest  2,736  in DoubleVerify Holdings on December 23, 2022 and sell it today you would earn a total of  152.00  from holding DoubleVerify Holdings or generate 5.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.65%
Values	Daily Returns

DoubleVerify Holdings  vs.  Merck Company

DoubleVerify Holdings

DoubleVerify Performance

14 of 100

Compared to the overall equity markets, risk-adjusted returns on investments in DoubleVerify Holdings are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, DoubleVerify Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

Merck Company

Merck Performance

0 of 100

Over the last 90 days Merck Company has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Merck is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with DoubleVerify Holdings and Merck

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

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The idea behind DoubleVerify Holdings 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.

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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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.