Correlation Between Harbor International and Merck
Can any of the company-specific risk be diversified away by investing in both Harbor International 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 Harbor International and Merck into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Harbor International Small and Merck Company, you can compare the effects of market volatilities on Harbor International 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 Harbor International with a short position of Merck. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harbor International and Merck.
Diversification Opportunities for Harbor International and Merck
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Harbor and Merck is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Harbor International Small and Merck Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merck Company and Harbor International 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 Harbor International Small 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 Harbor International i.e., Harbor International and Merck go up and down completely randomly.
Pair Corralation between Harbor International and Merck
If you would invest (100.00) in Harbor International Small on January 24, 2024 and sell it today you would earn a total of 100.00 from holding Harbor International Small or generate -100.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 0.0% |
Values | Daily Returns |
Harbor International Small vs. Merck Company
Performance |
Timeline |
Harbor International |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
Merck Company |
Harbor International and Merck Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Harbor International and Merck
The main advantage of trading using opposite Harbor International and Merck positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harbor International 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.Harbor International vs. Angel Oak Multi Strategy | Harbor International vs. Shelton Emerging Markets | Harbor International vs. Investec Emerging Markets | Harbor International vs. Gmo Emerging Markets |
Merck vs. Silver Spike Investment | Merck vs. Alkermes Plc | Merck vs. Eagle Pharmaceuticals | Merck vs. Evotec SE ADR |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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