Correlation Between Sealed Air and Fresenius Medical

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Can any of the company-specific risk be diversified away by investing in both Sealed Air 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 Sealed Air and Fresenius Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sealed Air Corp and Fresenius Medical Care, you can compare the effects of market volatilities on Sealed Air 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 Sealed Air with a short position of Fresenius Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sealed Air and Fresenius Medical.

Diversification Opportunities for Sealed Air and Fresenius Medical

0.44
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Sealed and Fresenius is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Sealed Air Corp 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 Sealed Air 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 Sealed Air Corp 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 Sealed Air i.e., Sealed Air and Fresenius Medical go up and down completely randomly.

Pair Corralation between Sealed Air and Fresenius Medical

Assuming the 90 days trading horizon Sealed Air is expected to generate 19.75 times less return on investment than Fresenius Medical. But when comparing it to its historical volatility, Sealed Air Corp is 1.77 times less risky than Fresenius Medical. It trades about 0.02 of its potential returns per unit of risk. Fresenius Medical Care is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  3,754  in Fresenius Medical Care on August 30, 2024 and sell it today you would earn a total of  476.00  from holding Fresenius Medical Care or generate 12.68% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy95.65%
ValuesDaily Returns

Sealed Air Corp  vs.  Fresenius Medical Care

 Performance 
       Timeline  
Sealed Air Corp 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Sealed Air Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Sealed Air is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.
Fresenius Medical Care 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Fresenius Medical Care are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Fresenius Medical unveiled solid returns over the last few months and may actually be approaching a breakup point.

Sealed Air and Fresenius Medical Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Sealed Air and Fresenius Medical

The main advantage of trading using opposite Sealed Air and Fresenius Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sealed Air 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.
The idea behind Sealed Air Corp and Fresenius Medical Care pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.

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