Correlation Between Merck and Exagen

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

By analyzing existing cross correlation between Merck Company and Exagen Inc, you can compare the effects of market volatilities on Merck and Exagen 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 Exagen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Exagen.

Diversification Opportunities for Merck and Exagen

0.34

Correlation Coefficient

Merck  Exagen

Weak diversification

The 3 months correlation between Merck and Exagen is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Exagen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exagen Inc 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 Exagen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exagen Inc has no effect on the direction of Merck i.e., Merck and Exagen go up and down completely randomly.

Pair Corralation between Merck and Exagen

Considering the 90-day investment horizon Merck is expected to generate 14.28 times less return on investment than Exagen. But when comparing it to its historical volatility, Merck Company is 2.04 times less risky than Exagen. It trades about 0.02 of its potential returns per unit of risk. Exagen Inc is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  642.00  in Exagen Inc on May 6, 2025 and sell it today you would earn a total of  221.00  from holding Exagen Inc or generate 34.42% return on investment over 90 days.

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

Merck Company  vs.  Exagen Inc

Merck Company

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Merck Company are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Exagen Inc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Exagen Inc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, Exagen displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Merck and Exagen

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

The idea behind Merck Company and Exagen Inc 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.