Correlation Between Pentair PLC and Fresenius Medical
Can any of the company-specific risk be diversified away by investing in both Pentair PLC 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 Pentair PLC and Fresenius Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pentair PLC and Fresenius Medical Care, you can compare the effects of market volatilities on Pentair PLC 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 Pentair PLC with a short position of Fresenius Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pentair PLC and Fresenius Medical.
Diversification Opportunities for Pentair PLC and Fresenius Medical
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Pentair and Fresenius is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Pentair PLC 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 Pentair PLC 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 Pentair PLC 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 Pentair PLC i.e., Pentair PLC and Fresenius Medical go up and down completely randomly.
Pair Corralation between Pentair PLC and Fresenius Medical
Assuming the 90 days trading horizon Pentair PLC is expected to under-perform the Fresenius Medical. But the stock apears to be less risky and, when comparing its historical volatility, Pentair PLC is 1.28 times less risky than Fresenius Medical. The stock trades about -0.44 of its potential returns per unit of risk. The Fresenius Medical Care is currently generating about -0.19 of returns per unit of risk over similar time horizon. If you would invest 4,687 in Fresenius Medical Care on November 28, 2024 and sell it today you would lose (272.00) from holding Fresenius Medical Care or give up 5.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Pentair PLC vs. Fresenius Medical Care
Performance |
| Timeline |
| Pentair PLC |
| Fresenius Medical Care |
Pentair PLC and Fresenius Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pentair PLC and Fresenius Medical
The main advantage of trading using opposite Pentair PLC and Fresenius Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pentair PLC 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.| Pentair PLC vs. MoneysupermarketCom Group PLC | Pentair PLC vs. Schroders Investment Trusts | Pentair PLC vs. Smithson Investment Trust | Pentair PLC vs. Monks Investment Trust |
| Fresenius Medical vs. Spirent Communications plc | Fresenius Medical vs. Cellnex Telecom SA | Fresenius Medical vs. Software Circle plc | Fresenius Medical vs. Aptitude Software Group |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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