Correlation Between Merck and SIMON

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

By analyzing existing cross correlation between Merck Company and SIMON PPTY GROUP, you can compare the effects of market volatilities on Merck and SIMON 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 Merck with a short position of SIMON. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and SIMON.

Diversification Opportunities for Merck and SIMON

0.0

Correlation Coefficient

Merck  SIMON

Pay attention - limited upside

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

Pair Corralation between Merck and SIMON

Considering the 90-day investment horizon Merck Company is expected to under-perform the SIMON. In addition to that, Merck is 1.39 times more volatile than SIMON PPTY GROUP. It trades about 0.0 of its total potential returns per unit of risk. SIMON PPTY GROUP is currently generating about 0.0 per unit of volatility. If you would invest  8,304  in SIMON PPTY GROUP on June 28, 2025 and sell it today you would lose (23.00) from holding SIMON PPTY GROUP or give up 0.28% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	43.55%
Values	Daily Returns

Merck Company  vs.  SIMON PPTY GROUP

Merck Company

Risk-Adjusted Performance

Weakest

Over the last 90 days Merck Company has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Merck is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

SIMON PPTY GROUP

Risk-Adjusted Performance

Soft

Over the last 90 days SIMON PPTY GROUP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, SIMON is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Merck and SIMON

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

The idea behind Merck Company and SIMON PPTY GROUP 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..