Correlation Between Merck and Unified Series

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

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

Diversification Opportunities for Merck and Unified Series

0.6

Correlation Coefficient

Merck  Unified Series

Poor diversification

The 3 months correlation between Merck and Unified is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Unified Series Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unified Series Trust and Merck 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 Merck Company are associated (or correlated) with Unified Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unified Series Trust has no effect on the direction of Merck i.e., Merck and Unified Series go up and down completely randomly.

Pair Corralation between Merck and Unified Series

Considering the 90-day investment horizon Merck Company is expected to generate 1.74 times more return on investment than Unified Series. However, Merck is 1.74 times more volatile than Unified Series Trust. It trades about 0.09 of its potential returns per unit of risk. Unified Series Trust is currently generating about -0.2 per unit of risk. If you would invest  12,220  in Merck Company on January 19, 2024 and sell it today you would earn a total of  303.00  from holding Merck Company or generate 2.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Merck Company  vs.  Unified Series Trust

Merck Company

Risk-Adjusted Performance

7 of 100

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 persistent basic indicators, Merck is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Unified Series Trust

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Unified Series Trust are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, Unified Series is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Merck and Unified Series

The main advantage of trading using opposite Merck and Unified Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Unified Series 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 Unified Series will offset losses from the drop in Unified Series' long position.

The idea behind Merck Company and Unified Series Trust 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.