Correlation Between 23Andme Holding and Merck

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Can any of the company-specific risk be diversified away by investing in both 23Andme Holding 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 23Andme Holding and Merck into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 23Andme Holding Co and Merck Company, you can compare the effects of market volatilities on 23Andme Holding 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 23Andme Holding with a short position of Merck. Check out your portfolio center. Please also check ongoing floating volatility patterns of 23Andme Holding and Merck.

Diversification Opportunities for 23Andme Holding and Merck

-0.26
  Correlation Coefficient

Very good diversification

The 3 months correlation between 23Andme and Merck is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding 23Andme Holding Co and Merck Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merck Company and 23Andme Holding 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 23Andme Holding Co 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 23Andme Holding i.e., 23Andme Holding and Merck go up and down completely randomly.

Pair Corralation between 23Andme Holding and Merck

Allowing for the 90-day total investment horizon 23Andme Holding Co is expected to under-perform the Merck. In addition to that, 23Andme Holding is 4.39 times more volatile than Merck Company. It trades about -0.19 of its total potential returns per unit of risk. Merck Company is currently generating about 0.1 per unit of volatility. If you would invest  12,220  in Merck Company on January 19, 2024 and sell it today you would earn a total of  317.00  from holding Merck Company or generate 2.59% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

23Andme Holding Co  vs.  Merck Company

 Performance 
       Timeline  
23Andme Holding 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days 23Andme Holding Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in May 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.
Merck Company 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Merck Company are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, Merck may actually be approaching a critical reversion point that can send shares even higher in May 2024.

23Andme Holding and Merck Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with 23Andme Holding and Merck

The main advantage of trading using opposite 23Andme Holding and Merck positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 23Andme Holding 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 23Andme Holding Co 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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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.

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