Correlation Between MACOM Technology and Merit Medical

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

By analyzing existing cross correlation between MACOM Technology Solutions and Merit Medical Systems, you can compare the effects of market volatilities on MACOM Technology 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 MACOM Technology with a short position of Merit Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of MACOM Technology and Merit Medical.

Diversification Opportunities for MACOM Technology and Merit Medical

-0.46

Correlation Coefficient

MACOM Technology  Merit Medical

Very good diversification

The 3 months correlation between MACOM and Merit is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding MACOM Technology Solutions 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 MACOM Technology 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 MACOM Technology Solutions 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 MACOM Technology i.e., MACOM Technology and Merit Medical go up and down completely randomly.

Pair Corralation between MACOM Technology and Merit Medical

Assuming the 90 days horizon MACOM Technology Solutions is expected to generate 1.13 times more return on investment than Merit Medical. However, MACOM Technology is 1.13 times more volatile than Merit Medical Systems. It trades about 0.17 of its potential returns per unit of risk. Merit Medical Systems is currently generating about -0.1 per unit of risk. If you would invest  9,300  in MACOM Technology Solutions on April 25, 2025 and sell it today you would earn a total of  2,300  from holding MACOM Technology Solutions or generate 24.73% return on investment over 90 days.

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

MACOM Technology Solutions  vs.  Merit Medical Systems

MACOM Technology Sol

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MACOM Technology Solutions are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, MACOM Technology reported solid returns over the last few months and may actually be approaching a breakup point.

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. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with MACOM Technology and Merit Medical

The main advantage of trading using opposite MACOM Technology and Merit Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MACOM Technology 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.

The idea behind MACOM Technology Solutions and Merit Medical Systems 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.