Correlation Between Fresenius Medical and Livermore Investments
Can any of the company-specific risk be diversified away by investing in both Fresenius Medical and Livermore Investments 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 Livermore Investments 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 Livermore Investments Group, you can compare the effects of market volatilities on Fresenius Medical and Livermore Investments 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 Livermore Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fresenius Medical and Livermore Investments.
Diversification Opportunities for Fresenius Medical and Livermore Investments
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fresenius and Livermore is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Fresenius Medical Care and Livermore Investments Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Livermore Investments 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 Livermore Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Livermore Investments has no effect on the direction of Fresenius Medical i.e., Fresenius Medical and Livermore Investments go up and down completely randomly.
Pair Corralation between Fresenius Medical and Livermore Investments
Assuming the 90 days trading horizon Fresenius Medical Care is expected to generate 1.04 times more return on investment than Livermore Investments. However, Fresenius Medical is 1.04 times more volatile than Livermore Investments Group. It trades about 0.05 of its potential returns per unit of risk. Livermore Investments Group is currently generating about 0.04 per unit of risk. If you would invest 2,893 in Fresenius Medical Care on September 4, 2024 and sell it today you would earn a total of 1,415 from holding Fresenius Medical Care or generate 48.91% 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. Livermore Investments Group
Performance |
| Timeline |
| Fresenius Medical Care |
| Livermore Investments |
Fresenius Medical and Livermore Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fresenius Medical and Livermore Investments
The main advantage of trading using opposite Fresenius Medical and Livermore Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fresenius Medical position performs unexpectedly, Livermore Investments 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 Livermore Investments will offset losses from the drop in Livermore Investments' 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 |
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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 CEOs Directory module to screen CEOs from public companies around the world.
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