Correlation Between BW Offshore and Fresenius Medical
Can any of the company-specific risk be diversified away by investing in both BW Offshore 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 BW Offshore and Fresenius Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BW Offshore and Fresenius Medical Care, you can compare the effects of market volatilities on BW Offshore 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 BW Offshore with a short position of Fresenius Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW Offshore and Fresenius Medical.
Diversification Opportunities for BW Offshore and Fresenius Medical
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between 0RKH and Fresenius is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding BW Offshore 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 BW Offshore 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 BW Offshore 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 BW Offshore i.e., BW Offshore and Fresenius Medical go up and down completely randomly.
Pair Corralation between BW Offshore and Fresenius Medical
Assuming the 90 days trading horizon BW Offshore is expected to under-perform the Fresenius Medical. In addition to that, BW Offshore is 1.39 times more volatile than Fresenius Medical Care. It trades about -0.09 of its total potential returns per unit of risk. Fresenius Medical Care is currently generating about 0.14 per unit of volatility. If you would invest 3,897 in Fresenius Medical Care on August 24, 2024 and sell it today you would earn a total of 256.00 from holding Fresenius Medical Care or generate 6.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BW Offshore vs. Fresenius Medical Care
Performance |
| Timeline |
| BW Offshore |
| Fresenius Medical Care |
BW Offshore and Fresenius Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BW Offshore and Fresenius Medical
The main advantage of trading using opposite BW Offshore and Fresenius Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BW Offshore 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.| BW Offshore vs. Quadrise Plc | BW Offshore vs. Intuitive Investments Group | BW Offshore vs. European Metals Holdings | BW Offshore vs. Athelney Trust plc |
| Fresenius Medical vs. Quadrise Plc | Fresenius Medical vs. Intuitive Investments Group | Fresenius Medical vs. European Metals Holdings | Fresenius Medical vs. Athelney Trust plc |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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