Correlation Between Fresenius Medical and Fortune Brands
Can any of the company-specific risk be diversified away by investing in both Fresenius Medical and Fortune Brands 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 Fortune Brands 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 Fortune Brands Home, you can compare the effects of market volatilities on Fresenius Medical and Fortune Brands 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 Fortune Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fresenius Medical and Fortune Brands.
Diversification Opportunities for Fresenius Medical and Fortune Brands
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Fresenius and Fortune is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Fresenius Medical Care and Fortune Brands Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortune Brands Home 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 Fortune Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortune Brands Home has no effect on the direction of Fresenius Medical i.e., Fresenius Medical and Fortune Brands go up and down completely randomly.
Pair Corralation between Fresenius Medical and Fortune Brands
Assuming the 90 days trading horizon Fresenius Medical Care is expected to generate 0.75 times more return on investment than Fortune Brands. However, Fresenius Medical Care is 1.34 times less risky than Fortune Brands. It trades about 0.23 of its potential returns per unit of risk. Fortune Brands Home is currently generating about -0.07 per unit of risk. If you would invest 4,151 in Fresenius Medical Care on October 30, 2024 and sell it today you would earn a total of 513.00 from holding Fresenius Medical Care or generate 12.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 79.49% |
| Values | Daily Returns |
Fresenius Medical Care vs. Fortune Brands Home
Performance |
| Timeline |
| Fresenius Medical Care |
| Fortune Brands Home |
Fresenius Medical and Fortune Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fresenius Medical and Fortune Brands
The main advantage of trading using opposite Fresenius Medical and Fortune Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fresenius Medical position performs unexpectedly, Fortune Brands 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 Fortune Brands will offset losses from the drop in Fortune Brands' long position.| Fresenius Medical vs. Auction Technology Group | Fresenius Medical vs. Take Two Interactive Software | Fresenius Medical vs. Intermediate Capital Group | Fresenius Medical vs. Live Nation Entertainment |
| Fortune Brands vs. Anglo Asian Mining | Fortune Brands vs. Silver Bullet Data | Fortune Brands vs. Impax Asset Management | Fortune Brands vs. UNIQA Insurance Group |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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