Correlation Between Teleflex Incorporated and Merit Medical

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

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

Diversification Opportunities for Teleflex Incorporated and Merit Medical

0.83

Correlation Coefficient

Teleflex Incorporated  Merit Medical

Very poor diversification

The 3 months correlation between Teleflex and Merit is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Teleflex Incorporated and Merit Medical Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merit Medical Systems and Teleflex Incorporated 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 Teleflex Incorporated are associated (or correlated) with Merit Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merit Medical Systems has no effect on the direction of Teleflex Incorporated i.e., Teleflex Incorporated and Merit Medical go up and down completely randomly.

Pair Corralation between Teleflex Incorporated and Merit Medical

Considering the 90-day investment horizon Teleflex Incorporated is expected to under-perform the Merit Medical. In addition to that, Teleflex Incorporated is 1.0 times more volatile than Merit Medical Systems. It trades about -0.2 of its total potential returns per unit of risk. Merit Medical Systems is currently generating about -0.04 per unit of volatility. If you would invest  7,513  in Merit Medical Systems on February 1, 2024 and sell it today you would lose (103.00) from holding Merit Medical Systems or give up 1.37% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Teleflex Incorporated  vs.  Merit Medical Systems

Teleflex Incorporated

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Teleflex Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

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 latest uncertain performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Teleflex Incorporated and Merit Medical

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

The idea behind Teleflex Incorporated and Merit Medical Systems 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.

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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.