Correlation Between Merit Medical and BW Offshore

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

By analyzing existing cross correlation between Merit Medical Systems and BW Offshore Limited, you can compare the effects of market volatilities on Merit Medical and BW Offshore 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 Merit Medical with a short position of BW Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merit Medical and BW Offshore.

Diversification Opportunities for Merit Medical and BW Offshore

0.0

Correlation Coefficient

Merit Medical  BW Offshore

Pay attention - limited upside

The 3 months correlation between Merit and BGSWF is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems and BW Offshore Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BW Offshore Limited and Merit Medical 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 Merit Medical Systems are associated (or correlated) with BW Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BW Offshore Limited has no effect on the direction of Merit Medical i.e., Merit Medical and BW Offshore go up and down completely randomly.

Pair Corralation between Merit Medical and BW Offshore

If you would invest  7,513  in Merit Medical Systems on January 31, 2024 and sell it today you would lose (4.00) from holding Merit Medical Systems or give up 0.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Merit Medical Systems  vs.  BW Offshore Limited

Merit Medical Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Merit Medical Systems has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Merit Medical is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

BW Offshore Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BW Offshore Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, BW Offshore is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Merit Medical and BW Offshore

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

The idea behind Merit Medical Systems and BW Offshore Limited 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.