Correlation Between Fresenius Medical and Vulcan Materials
Can any of the company-specific risk be diversified away by investing in both Fresenius Medical and Vulcan Materials 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 Vulcan Materials 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 Vulcan Materials Co, you can compare the effects of market volatilities on Fresenius Medical and Vulcan Materials 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 Vulcan Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fresenius Medical and Vulcan Materials.
Diversification Opportunities for Fresenius Medical and Vulcan Materials
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fresenius and Vulcan is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Fresenius Medical Care and Vulcan Materials Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vulcan Materials 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 Vulcan Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vulcan Materials has no effect on the direction of Fresenius Medical i.e., Fresenius Medical and Vulcan Materials go up and down completely randomly.
Pair Corralation between Fresenius Medical and Vulcan Materials
Assuming the 90 days trading horizon Fresenius Medical Care is expected to generate 1.01 times more return on investment than Vulcan Materials. However, Fresenius Medical is 1.01 times more volatile than Vulcan Materials Co. It trades about 0.16 of its potential returns per unit of risk. Vulcan Materials Co is currently generating about 0.15 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 Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fresenius Medical Care vs. Vulcan Materials Co
Performance |
| Timeline |
| Fresenius Medical Care |
| Vulcan Materials |
Fresenius Medical and Vulcan Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fresenius Medical and Vulcan Materials
The main advantage of trading using opposite Fresenius Medical and Vulcan Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fresenius Medical position performs unexpectedly, Vulcan Materials 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 Vulcan Materials will offset losses from the drop in Vulcan Materials' 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 |
| Vulcan Materials vs. Uniper SE | Vulcan Materials vs. Mulberry Group PLC | Vulcan Materials vs. London Security Plc | Vulcan Materials 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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