Correlation Between Meta Platforms and Merck
Can any of the company-specific risk be diversified away by investing in both Meta Platforms 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 Meta Platforms and Merck into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Meta Platforms and Merck Company, you can compare the effects of market volatilities on Meta Platforms 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 Meta Platforms with a short position of Merck. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meta Platforms and Merck.
Diversification Opportunities for Meta Platforms and Merck
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Meta and Merck is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Meta Platforms and Merck Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merck Company and Meta Platforms 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 Meta Platforms 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 Meta Platforms i.e., Meta Platforms and Merck go up and down completely randomly.
Pair Corralation between Meta Platforms and Merck
Given the investment horizon of 90 days Meta Platforms is expected to under-perform the Merck. In addition to that, Meta Platforms is 1.28 times more volatile than Merck Company. It trades about -0.05 of its total potential returns per unit of risk. Merck Company is currently generating about 0.23 per unit of volatility. If you would invest 8,567 in Merck Company on October 8, 2025 and sell it today you would earn a total of 2,177 from holding Merck Company or generate 25.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Meta Platforms vs. Merck Company
Performance |
| Timeline |
| Meta Platforms |
| Merck Company |
Meta Platforms and Merck Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meta Platforms and Merck
The main advantage of trading using opposite Meta Platforms and Merck positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meta Platforms 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.| Meta Platforms vs. Taiwan Semiconductor Manufacturing | Meta Platforms vs. Broadcom | Meta Platforms vs. Alphabet Inc Class A | Meta Platforms vs. Oracle |
| Merck vs. Journey Medical Corp | Merck vs. InfuSystems Holdings | Merck vs. Aurora Cannabis | Merck vs. Helius Medical Technologies |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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