Correlation Between Uber Technologies and Merck
Can any of the company-specific risk be diversified away by investing in both Uber Technologies 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 Uber Technologies and Merck into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Uber Technologies and Merck Company, you can compare the effects of market volatilities on Uber Technologies 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 Uber Technologies with a short position of Merck. Check out your portfolio center. Please also check ongoing floating volatility patterns of Uber Technologies and Merck.
Diversification Opportunities for Uber Technologies and Merck
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Uber and Merck is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Uber Technologies and Merck Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merck Company and Uber Technologies 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 Uber Technologies 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 Uber Technologies i.e., Uber Technologies and Merck go up and down completely randomly.
Pair Corralation between Uber Technologies and Merck
Given the investment horizon of 90 days Uber Technologies is expected to generate 2.34 times more return on investment than Merck. However, Uber Technologies is 2.34 times more volatile than Merck Company. It trades about 0.06 of its potential returns per unit of risk. Merck Company is currently generating about 0.09 per unit of risk. If you would invest 6,455 in Uber Technologies on January 21, 2024 and sell it today you would earn a total of 465.00 from holding Uber Technologies or generate 7.2% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Uber Technologies vs. Merck Company
Performance |
Timeline |
Uber Technologies |
Merck Company |
Uber Technologies and Merck Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Uber Technologies and Merck
The main advantage of trading using opposite Uber Technologies and Merck positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Uber Technologies 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.Uber Technologies vs. Zoom Video Communications | Uber Technologies vs. Snowflake | Uber Technologies vs. Workday | Uber Technologies vs. C3 Ai Inc |
Merck vs. Alkermes Plc | Merck vs. Ironwood Pharmaceuticals | Merck vs. Deciphera Pharmaceuticals LLC | Merck vs. Eagle Pharmaceuticals |
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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