Correlation Between Merck and Pacira Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Merck and Pacira Pharmaceuticals 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 Pacira Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Pacira Pharmaceuticals, you can compare the effects of market volatilities on Merck and Pacira Pharmaceuticals 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 Pacira Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Pacira Pharmaceuticals.
Diversification Opportunities for Merck and Pacira Pharmaceuticals
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Merck and Pacira is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Pacira Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacira Pharmaceuticals 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 Pacira Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacira Pharmaceuticals has no effect on the direction of Merck i.e., Merck and Pacira Pharmaceuticals go up and down completely randomly.
Pair Corralation between Merck and Pacira Pharmaceuticals
Considering the 90-day investment horizon Merck Company is expected to generate 0.45 times more return on investment than Pacira Pharmaceuticals. However, Merck Company is 2.24 times less risky than Pacira Pharmaceuticals. It trades about 0.05 of its potential returns per unit of risk. Pacira Pharmaceuticals is currently generating about -0.11 per unit of risk. If you would invest 12,656 in Merck Company on February 6, 2024 and sell it today you would earn a total of 95.00 from holding Merck Company or generate 0.75% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Merck Company vs. Pacira Pharmaceuticals
Performance |
Timeline |
Merck Company |
Pacira Pharmaceuticals |
Merck and Pacira Pharmaceuticals Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Merck and Pacira Pharmaceuticals
The main advantage of trading using opposite Merck and Pacira Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Pacira Pharmaceuticals 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 Pacira Pharmaceuticals will offset losses from the drop in Pacira Pharmaceuticals' long position.Merck vs. Shuttle Pharmaceuticals | Merck vs. Lifecore Biomedical | Merck vs. Journey Medical Corp | Merck vs. Lucy Scientific Discovery |
Pacira Pharmaceuticals vs. Phibro Animal Health | Pacira Pharmaceuticals vs. Dr Reddys Laboratories | Pacira Pharmaceuticals vs. Collegium Pharmaceutical | Pacira Pharmaceuticals vs. Silver Spike 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
Other Complementary Tools
Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
Fundamental Analysis View fundamental data based on most recent published financial statements | |
Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |