Correlation Between Pfizer and Merit Medical
Can any of the company-specific risk be diversified away by investing in both Pfizer and Merit Medical 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 Pfizer and Merit Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pfizer Inc and Merit Medical Systems, you can compare the effects of market volatilities on Pfizer and Merit Medical 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 Pfizer with a short position of Merit Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and Merit Medical.
Diversification Opportunities for Pfizer and Merit Medical
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pfizer and Merit is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Merit Medical Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merit Medical Systems and Pfizer 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 Pfizer Inc are associated (or correlated) with Merit Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merit Medical Systems has no effect on the direction of Pfizer i.e., Pfizer and Merit Medical go up and down completely randomly.
Pair Corralation between Pfizer and Merit Medical
Considering the 90-day investment horizon Pfizer Inc is expected to generate 0.82 times more return on investment than Merit Medical. However, Pfizer Inc is 1.22 times less risky than Merit Medical. It trades about -0.02 of its potential returns per unit of risk. Merit Medical Systems is currently generating about -0.04 per unit of risk. If you would invest 2,556 in Pfizer Inc on March 17, 2025 and sell it today you would lose (102.00) from holding Pfizer Inc or give up 3.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pfizer Inc vs. Merit Medical Systems
Performance |
| Timeline |
| Pfizer Inc |
| Merit Medical Systems |
Pfizer and Merit Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pfizer and Merit Medical
The main advantage of trading using opposite Pfizer and Merit Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer position performs unexpectedly, Merit Medical 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 Merit Medical will offset losses from the drop in Merit Medical's long position.| Pfizer vs. AbbVie Inc | Pfizer vs. Merck Company | Pfizer vs. Eli Lilly and | Pfizer vs. Bristol Myers Squibb |
| Merit Medical vs. JIN MEDICAL INTERNATIONAL | Merit Medical vs. Meihua International Medical | Merit Medical vs. GlucoTrack | Merit Medical vs. Innovative Eyewear |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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