Correlation Between Merck and Allergan Plc
Can any of the company-specific risk be diversified away by investing in both Merck and Allergan Plc 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 Allergan Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Allergan Plc, you can compare the effects of market volatilities on Merck and Allergan Plc 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 Allergan Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Allergan Plc.
Diversification Opportunities for Merck and Allergan Plc
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Merck and Allergan is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Allergan Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allergan Plc 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 Allergan Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allergan Plc has no effect on the direction of Merck i.e., Merck and Allergan Plc go up and down completely randomly.
Pair Corralation between Merck and Allergan Plc
If you would invest 12,385 in Merck Company on January 20, 2024 and sell it today you would earn a total of 193.00 from holding Merck Company or generate 1.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Merck Company vs. Allergan Plc
Performance |
| Timeline |
| Merck Company |
| Allergan Plc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Merck and Allergan Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Allergan Plc
The main advantage of trading using opposite Merck and Allergan Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Allergan Plc 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 Allergan Plc will offset losses from the drop in Allergan Plc's long position.| Merck vs. Alkermes Plc | Merck vs. Ironwood Pharmaceuticals | Merck vs. Deciphera Pharmaceuticals LLC | Merck vs. Eagle Pharmaceuticals |
| Allergan Plc vs. Aptiv PLC | Allergan Plc vs. Gentex | Allergan Plc vs. Wabash National | Allergan Plc vs. Premium Beverage Group |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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