Correlation Between Merck and ATT

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Merck and ATT 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 ATT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and ATT Inc, you can compare the effects of market volatilities on Merck and ATT 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 ATT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and ATT.

Diversification Opportunities for Merck and ATT

0.03
  Correlation Coefficient

Significant diversification

The 3 months correlation between Merck and ATT is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and ATT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATT Inc 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 ATT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATT Inc has no effect on the direction of Merck i.e., Merck and ATT go up and down completely randomly.

Pair Corralation between Merck and ATT

Considering the 90-day investment horizon Merck is expected to generate 95.22 times less return on investment than ATT. In addition to that, Merck is 1.12 times more volatile than ATT Inc. It trades about 0.0 of its total potential returns per unit of risk. ATT Inc is currently generating about 0.19 per unit of volatility. If you would invest  1,626  in ATT Inc on April 23, 2024 and sell it today you would earn a total of  229.00  from holding ATT Inc or generate 14.08% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Merck Company  vs.  ATT Inc

 Performance 
       Timeline  
Merck Company 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
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 latest stock price mess, may contribute to short-term losses for the institutional investors.
ATT Inc 

Risk-Adjusted Performance

15 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in ATT Inc are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, ATT unveiled solid returns over the last few months and may actually be approaching a breakup point.

Merck and ATT Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Merck and ATT

The main advantage of trading using opposite Merck and ATT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, ATT 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 ATT will offset losses from the drop in ATT's long position.
The idea behind Merck Company and ATT Inc 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.
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.

Other Complementary Tools

Insider Screener
Find insiders across different sectors to evaluate their impact on performance
Bonds Directory
Find actively traded corporate debentures issued by US companies
Portfolio Suggestion
Get suggestions outside of your existing asset allocation including your own model portfolios
Options Analysis
Analyze and evaluate options and option chains as a potential hedge for your portfolios
ETFs
Find actively traded Exchange Traded Funds (ETF) from around the world