Correlation Between Fresenius Medical and DFS Furniture
Can any of the company-specific risk be diversified away by investing in both Fresenius Medical and DFS Furniture 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 DFS Furniture 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 DFS Furniture PLC, you can compare the effects of market volatilities on Fresenius Medical and DFS Furniture 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 DFS Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fresenius Medical and DFS Furniture.
Diversification Opportunities for Fresenius Medical and DFS Furniture
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fresenius and DFS is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Fresenius Medical Care and DFS Furniture PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DFS Furniture 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 DFS Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DFS Furniture PLC has no effect on the direction of Fresenius Medical i.e., Fresenius Medical and DFS Furniture go up and down completely randomly.
Pair Corralation between Fresenius Medical and DFS Furniture
Assuming the 90 days trading horizon Fresenius Medical Care is expected to generate 0.52 times more return on investment than DFS Furniture. However, Fresenius Medical Care is 1.92 times less risky than DFS Furniture. It trades about 0.06 of its potential returns per unit of risk. DFS Furniture PLC is currently generating about -0.02 per unit of risk. If you would invest 4,435 in Fresenius Medical Care on December 26, 2024 and sell it today you would earn a total of 96.00 from holding Fresenius Medical Care or generate 2.16% 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. DFS Furniture PLC
Performance |
| Timeline |
| Fresenius Medical Care |
| DFS Furniture PLC |
Fresenius Medical and DFS Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fresenius Medical and DFS Furniture
The main advantage of trading using opposite Fresenius Medical and DFS Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fresenius Medical position performs unexpectedly, DFS Furniture 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 DFS Furniture will offset losses from the drop in DFS Furniture's long position.| Fresenius Medical vs. Alfa Financial Software | Fresenius Medical vs. Various Eateries PLC | Fresenius Medical vs. Bigblu Broadband PLC | Fresenius Medical vs. Kaufman Et Broad |
| DFS Furniture vs. Applied Materials | DFS Furniture vs. Molson Coors Beverage | DFS Furniture vs. Lundin Mining Corp | DFS Furniture vs. Heavitree Brewery |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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