Correlation Between Fresenius Medical and Compass Group
Can any of the company-specific risk be diversified away by investing in both Fresenius Medical and Compass Group 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 Compass Group 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 Compass Group PLC, you can compare the effects of market volatilities on Fresenius Medical and Compass Group 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 Compass Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fresenius Medical and Compass Group.
Diversification Opportunities for Fresenius Medical and Compass Group
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fresenius and Compass is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Fresenius Medical Care and Compass Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compass Group PLC 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 Compass Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compass Group PLC has no effect on the direction of Fresenius Medical i.e., Fresenius Medical and Compass Group go up and down completely randomly.
Pair Corralation between Fresenius Medical and Compass Group
Assuming the 90 days trading horizon Fresenius Medical is expected to generate 2.37 times less return on investment than Compass Group. In addition to that, Fresenius Medical is 1.87 times more volatile than Compass Group PLC. It trades about 0.04 of its total potential returns per unit of risk. Compass Group PLC is currently generating about 0.19 per unit of volatility. If you would invest 217,173 in Compass Group PLC on August 29, 2024 and sell it today you would earn a total of 53,427 from holding Compass Group PLC or generate 24.6% 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. Compass Group PLC
Performance |
| Timeline |
| Fresenius Medical Care |
| Compass Group PLC |
Fresenius Medical and Compass Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fresenius Medical and Compass Group
The main advantage of trading using opposite Fresenius Medical and Compass Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fresenius Medical position performs unexpectedly, Compass Group 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 Compass Group will offset losses from the drop in Compass Group's long position.| Fresenius Medical vs. Lendinvest PLC | Fresenius Medical vs. Neometals | Fresenius Medical vs. Coor Service Management | Fresenius Medical vs. Albion Technology General |
| Compass Group vs. Fresenius Medical Care | Compass Group vs. Albion Technology General | Compass Group vs. DXC Technology Co | Compass Group vs. Monster Beverage Corp |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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