Correlation Between Compass Group and Fresenius Medical
Can any of the company-specific risk be diversified away by investing in both Compass Group 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 Compass Group and Fresenius Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compass Group PLC and Fresenius Medical Care, you can compare the effects of market volatilities on Compass Group 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 Compass Group with a short position of Fresenius Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compass Group and Fresenius Medical.
Diversification Opportunities for Compass Group and Fresenius Medical
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Compass and Fresenius is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Compass Group 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 Compass Group 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 Compass Group 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 Compass Group i.e., Compass Group and Fresenius Medical go up and down completely randomly.
Pair Corralation between Compass Group and Fresenius Medical
Assuming the 90 days trading horizon Compass Group PLC is expected to generate 0.53 times more return on investment than Fresenius Medical. However, Compass Group PLC is 1.89 times less risky than Fresenius Medical. It trades about 0.2 of its potential returns per unit of risk. Fresenius Medical Care is currently generating about 0.03 per unit of risk. If you would invest 214,796 in Compass Group PLC on September 1, 2024 and sell it today you would earn a total of 54,304 from holding Compass Group PLC or generate 25.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.23% |
| Values | Daily Returns |
Compass Group PLC vs. Fresenius Medical Care
Performance |
| Timeline |
| Compass Group PLC |
| Fresenius Medical Care |
Compass Group and Fresenius Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compass Group and Fresenius Medical
The main advantage of trading using opposite Compass Group and Fresenius Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compass Group 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.| Compass Group vs. G5 Entertainment AB | Compass Group vs. XLMedia PLC | Compass Group vs. Centaur Media | Compass Group vs. Flutter Entertainment PLC |
| Fresenius Medical vs. Uniper SE | Fresenius Medical vs. Mulberry Group PLC | Fresenius Medical vs. London Security Plc | Fresenius Medical vs. Triad Group 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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