Correlation Between Fresenius Medical and Monks Investment
Can any of the company-specific risk be diversified away by investing in both Fresenius Medical and Monks Investment 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 Monks Investment 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 Monks Investment Trust, you can compare the effects of market volatilities on Fresenius Medical and Monks Investment 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 Monks Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fresenius Medical and Monks Investment.
Diversification Opportunities for Fresenius Medical and Monks Investment
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fresenius and Monks is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Fresenius Medical Care and Monks Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monks Investment Trust 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 Monks Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monks Investment Trust has no effect on the direction of Fresenius Medical i.e., Fresenius Medical and Monks Investment go up and down completely randomly.
Pair Corralation between Fresenius Medical and Monks Investment
Assuming the 90 days trading horizon Fresenius Medical Care is expected to generate 1.95 times more return on investment than Monks Investment. However, Fresenius Medical is 1.95 times more volatile than Monks Investment Trust. It trades about 0.05 of its potential returns per unit of risk. Monks Investment Trust is currently generating about 0.05 per unit of risk. If you would invest 2,835 in Fresenius Medical Care on August 27, 2024 and sell it today you would earn a total of 1,403 from holding Fresenius Medical Care or generate 49.49% 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. Monks Investment Trust
Performance |
| Timeline |
| Fresenius Medical Care |
| Monks Investment Trust |
Fresenius Medical and Monks Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fresenius Medical and Monks Investment
The main advantage of trading using opposite Fresenius Medical and Monks Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fresenius Medical position performs unexpectedly, Monks Investment 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 Monks Investment will offset losses from the drop in Monks Investment's 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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