Correlation Between Automatic Data and Fresenius Medical
Can any of the company-specific risk be diversified away by investing in both Automatic Data and Fresenius Medical 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 Automatic Data and Fresenius Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Automatic Data Processing and Fresenius Medical Care, you can compare the effects of market volatilities on Automatic Data and Fresenius Medical 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 Automatic Data with a short position of Fresenius Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automatic Data and Fresenius Medical.
Diversification Opportunities for Automatic Data and Fresenius Medical
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Automatic and Fresenius is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Automatic Data Processing and Fresenius Medical Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fresenius Medical Care and Automatic Data 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 Automatic Data Processing are associated (or correlated) with Fresenius Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fresenius Medical Care has no effect on the direction of Automatic Data i.e., Automatic Data and Fresenius Medical go up and down completely randomly.
Pair Corralation between Automatic Data and Fresenius Medical
Assuming the 90 days trading horizon Automatic Data Processing is expected to generate 0.38 times more return on investment than Fresenius Medical. However, Automatic Data Processing is 2.6 times less risky than Fresenius Medical. It trades about 0.25 of its potential returns per unit of risk. Fresenius Medical Care is currently generating about -0.11 per unit of risk. If you would invest 30,340 in Automatic Data Processing on December 1, 2024 and sell it today you would earn a total of 924.00 from holding Automatic Data Processing or generate 3.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Automatic Data Processing vs. Fresenius Medical Care
Performance |
| Timeline |
| Automatic Data Processing |
| Fresenius Medical Care |
Automatic Data and Fresenius Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automatic Data and Fresenius Medical
The main advantage of trading using opposite Automatic Data and Fresenius Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automatic Data position performs unexpectedly, Fresenius Medical 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 Fresenius Medical will offset losses from the drop in Fresenius Medical's long position.| Automatic Data vs. Extra Space Storage | Automatic Data vs. Seche Environnement SA | Automatic Data vs. Veolia Environnement VE | Automatic Data vs. Monster Beverage Corp |
| Fresenius Medical vs. Fulcrum Metals PLC | Fresenius Medical vs. Public Storage | Fresenius Medical vs. GlobalData PLC | Fresenius Medical vs. GreenX Metals |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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