Correlation Between Merit Medical and Contango ORE

Can any of the company-specific risk be diversified away by investing in both Merit Medical and Contango ORE 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 Contango ORE 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 Contango ORE, you can compare the effects of market volatilities on Merit Medical and Contango ORE 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 Contango ORE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merit Medical and Contango ORE.

Diversification Opportunities for Merit Medical and Contango ORE

-0.41

Correlation Coefficient

Merit Medical  Contango ORE

Very good diversification

The 3 months correlation between Merit and Contango is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems and Contango ORE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Contango ORE 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 Contango ORE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Contango ORE has no effect on the direction of Merit Medical i.e., Merit Medical and Contango ORE go up and down completely randomly.

Pair Corralation between Merit Medical and Contango ORE

Given the investment horizon of 90 days Merit Medical Systems is expected to under-perform the Contango ORE. But the stock apears to be less risky and, when comparing its historical volatility, Merit Medical Systems is 1.91 times less risky than Contango ORE. The stock trades about -0.09 of its potential returns per unit of risk. The Contango ORE is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,716  in Contango ORE on May 21, 2025 and sell it today you would earn a total of  457.00  from holding Contango ORE or generate 26.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Merit Medical Systems  vs.  Contango ORE

Merit Medical Systems

Risk-Adjusted Performance

Weakest

Over the last 90 days Merit Medical Systems has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak 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.

Contango ORE

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Contango ORE are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent technical and fundamental indicators, Contango ORE displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Merit Medical and Contango ORE

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

The idea behind Merit Medical Systems and Contango ORE 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.