Correlation Between Fresenius Medical and Spotify Technology
Can any of the company-specific risk be diversified away by investing in both Fresenius Medical and Spotify Technology 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 Spotify Technology 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 Spotify Technology SA, you can compare the effects of market volatilities on Fresenius Medical and Spotify Technology 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 Spotify Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fresenius Medical and Spotify Technology.
Diversification Opportunities for Fresenius Medical and Spotify Technology
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Fresenius and Spotify is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Fresenius Medical Care and Spotify Technology SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spotify Technology 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 Spotify Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spotify Technology has no effect on the direction of Fresenius Medical i.e., Fresenius Medical and Spotify Technology go up and down completely randomly.
Pair Corralation between Fresenius Medical and Spotify Technology
Assuming the 90 days trading horizon Fresenius Medical is expected to generate 4.18 times less return on investment than Spotify Technology. But when comparing it to its historical volatility, Fresenius Medical Care is 1.24 times less risky than Spotify Technology. It trades about 0.04 of its potential returns per unit of risk. Spotify Technology SA is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 9,408 in Spotify Technology SA on October 14, 2024 and sell it today you would earn a total of 35,862 from holding Spotify Technology SA or generate 381.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 98.2% |
| Values | Daily Returns |
Fresenius Medical Care vs. Spotify Technology SA
Performance |
| Timeline |
| Fresenius Medical Care |
| Spotify Technology |
Fresenius Medical and Spotify Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fresenius Medical and Spotify Technology
The main advantage of trading using opposite Fresenius Medical and Spotify Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fresenius Medical position performs unexpectedly, Spotify Technology 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 Spotify Technology will offset losses from the drop in Spotify Technology's long position.| Fresenius Medical vs. Beowulf Mining | Fresenius Medical vs. First Class Metals | Fresenius Medical vs. Hochschild Mining plc | Fresenius Medical vs. Aptitude Software Group |
| Spotify Technology vs. Rheinmetall AG | Spotify Technology vs. Fresenius Medical Care | Spotify Technology vs. Futura Medical | Spotify Technology vs. BE Semiconductor Industries |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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