Correlation Between Barclays Capital and Merck
Can any of the company-specific risk be diversified away by investing in both Barclays Capital 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 Barclays Capital and Merck into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barclays Capital and Merck Company, you can compare the effects of market volatilities on Barclays Capital 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 Barclays Capital with a short position of Merck. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barclays Capital and Merck.
Diversification Opportunities for Barclays Capital and Merck
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Barclays and Merck is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Barclays Capital and Merck Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merck Company and Barclays Capital 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 Barclays Capital 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 Barclays Capital i.e., Barclays Capital and Merck go up and down completely randomly.
Pair Corralation between Barclays Capital and Merck
If you would invest 12,531 in Merck Company on January 24, 2024 and sell it today you would earn a total of 157.00 from holding Merck Company or generate 1.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
Barclays Capital vs. Merck Company
Performance |
| Timeline |
| Barclays Capital |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Merck Company |
Barclays Capital and Merck Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barclays Capital and Merck
The main advantage of trading using opposite Barclays Capital and Merck positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barclays Capital 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.| Barclays Capital vs. Vanguard Total Stock | Barclays Capital vs. SPDR SP 500 | Barclays Capital vs. iShares Core SP | Barclays Capital vs. Vanguard Total Bond |
| 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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