Correlation Between Merit Medical and Teleflex Incorporated

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

Diversification Opportunities for Merit Medical and Teleflex Incorporated

0.73

Correlation Coefficient

Merit Medical  Teleflex Incorporated

Poor diversification

The 3 months correlation between Merit and Teleflex is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems and Teleflex Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teleflex Incorporated 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 Teleflex Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teleflex Incorporated has no effect on the direction of Merit Medical i.e., Merit Medical and Teleflex Incorporated go up and down completely randomly.

Pair Corralation between Merit Medical and Teleflex Incorporated

Given the investment horizon of 90 days Merit Medical Systems is expected to under-perform the Teleflex Incorporated. In addition to that, Merit Medical is 1.06 times more volatile than Teleflex Incorporated. It trades about -0.09 of its total potential returns per unit of risk. Teleflex Incorporated is currently generating about -0.07 per unit of volatility. If you would invest  12,554  in Teleflex Incorporated on May 1, 2025 and sell it today you would lose (1,005) from holding Teleflex Incorporated or give up 8.01% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Merit Medical Systems  vs.  Teleflex Incorporated

Merit Medical Systems

Risk-Adjusted Performance

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 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.

Teleflex Incorporated

Risk-Adjusted Performance

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 latest uncertain performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Merit Medical and Teleflex Incorporated

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

The idea behind Merit Medical Systems and Teleflex Incorporated 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.