Correlation Between Fresenius Medical and Medical Properties
Can any of the company-specific risk be diversified away by investing in both Fresenius Medical and Medical Properties 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 Medical Properties 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 Medical Properties Trust, you can compare the effects of market volatilities on Fresenius Medical and Medical Properties 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 Medical Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fresenius Medical and Medical Properties.
Diversification Opportunities for Fresenius Medical and Medical Properties
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fresenius and Medical is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Fresenius Medical Care and Medical Properties Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medical Properties Trust 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 Medical Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medical Properties Trust has no effect on the direction of Fresenius Medical i.e., Fresenius Medical and Medical Properties go up and down completely randomly.
Pair Corralation between Fresenius Medical and Medical Properties
Assuming the 90 days trading horizon Fresenius Medical Care is expected to generate 0.45 times more return on investment than Medical Properties. However, Fresenius Medical Care is 2.22 times less risky than Medical Properties. It trades about 0.16 of its potential returns per unit of risk. Medical Properties Trust is currently generating about 0.01 per unit of risk. If you would invest 3,470 in Fresenius Medical Care on September 2, 2024 and sell it today you would earn a total of 681.00 from holding Fresenius Medical Care or generate 19.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fresenius Medical Care vs. Medical Properties Trust
Performance |
| Timeline |
| Fresenius Medical Care |
| Medical Properties Trust |
Fresenius Medical and Medical Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fresenius Medical and Medical Properties
The main advantage of trading using opposite Fresenius Medical and Medical Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fresenius Medical position performs unexpectedly, Medical Properties 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 Medical Properties will offset losses from the drop in Medical Properties' 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 |
| Medical Properties vs. Uniper SE | Medical Properties vs. Mulberry Group PLC | Medical Properties vs. London Security Plc | Medical Properties 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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