Correlation Between Fresenius Medical and Yum Brands
Can any of the company-specific risk be diversified away by investing in both Fresenius Medical and Yum 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 Yum 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 Yum Brands, you can compare the effects of market volatilities on Fresenius Medical and Yum 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 Yum Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fresenius Medical and Yum Brands.
Diversification Opportunities for Fresenius Medical and Yum Brands
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Fresenius and Yum is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Fresenius Medical Care and Yum Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yum Brands 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 Yum Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yum Brands has no effect on the direction of Fresenius Medical i.e., Fresenius Medical and Yum Brands go up and down completely randomly.
Pair Corralation between Fresenius Medical and Yum Brands
Assuming the 90 days trading horizon Fresenius Medical Care is expected to generate 1.41 times more return on investment than Yum Brands. However, Fresenius Medical is 1.41 times more volatile than Yum Brands. It trades about 0.19 of its potential returns per unit of risk. Yum Brands is currently generating about 0.04 per unit of risk. If you would invest 3,898 in Fresenius Medical Care on August 26, 2024 and sell it today you would earn a total of 340.00 from holding Fresenius Medical Care or generate 8.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fresenius Medical Care vs. Yum Brands
Performance |
| Timeline |
| Fresenius Medical Care |
| Yum Brands |
Fresenius Medical and Yum Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fresenius Medical and Yum Brands
The main advantage of trading using opposite Fresenius Medical and Yum Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fresenius Medical position performs unexpectedly, Yum 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 Yum Brands will offset losses from the drop in Yum Brands' long position.| Fresenius Medical vs. Samsung Electronics Co | Fresenius Medical vs. Samsung Electronics Co | Fresenius Medical vs. Hyundai Motor | Fresenius Medical vs. Toyota Motor Corp |
| Yum Brands vs. Vitec Software Group | Yum Brands vs. Ryanair Holdings plc | Yum Brands vs. Fresenius Medical Care | Yum Brands vs. Check Point Software |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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