Correlation Between Fresenius Medical and Fidelity National
Can any of the company-specific risk be diversified away by investing in both Fresenius Medical and Fidelity National 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 Fresenius Medical and Fidelity National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fresenius Medical Care and Fidelity National Information, you can compare the effects of market volatilities on Fresenius Medical and Fidelity National 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 Fresenius Medical with a short position of Fidelity National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fresenius Medical and Fidelity National.
Diversification Opportunities for Fresenius Medical and Fidelity National
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Fresenius and Fidelity is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Fresenius Medical Care and Fidelity National Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity National and Fresenius Medical 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 Fresenius Medical Care are associated (or correlated) with Fidelity National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity National has no effect on the direction of Fresenius Medical i.e., Fresenius Medical and Fidelity National go up and down completely randomly.
Pair Corralation between Fresenius Medical and Fidelity National
Assuming the 90 days trading horizon Fresenius Medical is expected to generate 1.15 times less return on investment than Fidelity National. But when comparing it to its historical volatility, Fresenius Medical Care is 1.86 times less risky than Fidelity National. It trades about 0.05 of its potential returns per unit of risk. Fidelity National Information is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 6,734 in Fidelity National Information on September 2, 2024 and sell it today you would earn a total of 1,801 from holding Fidelity National Information or generate 26.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.4% |
| Values | Daily Returns |
Fresenius Medical Care vs. Fidelity National Information
Performance |
| Timeline |
| Fresenius Medical Care |
| Fidelity National |
Fresenius Medical and Fidelity National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fresenius Medical and Fidelity National
The main advantage of trading using opposite Fresenius Medical and Fidelity National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fresenius Medical position performs unexpectedly, Fidelity National 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 Fidelity National will offset losses from the drop in Fidelity National's long position.| Fresenius Medical vs. Uniper SE | Fresenius Medical vs. Mulberry Group PLC | Fresenius Medical vs. London Security Plc | Fresenius Medical vs. Triad Group PLC |
| Fidelity National vs. Uniper SE | Fidelity National vs. Mulberry Group PLC | Fidelity National vs. London Security Plc | Fidelity National vs. Triad Group PLC |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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