Correlation Between EJF Investments and Fresenius Medical
Can any of the company-specific risk be diversified away by investing in both EJF Investments 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 EJF Investments and Fresenius Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EJF Investments and Fresenius Medical Care, you can compare the effects of market volatilities on EJF Investments 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 EJF Investments with a short position of Fresenius Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of EJF Investments and Fresenius Medical.
Diversification Opportunities for EJF Investments and Fresenius Medical
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between EJF and Fresenius is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding EJF Investments 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 EJF Investments 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 EJF Investments 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 EJF Investments i.e., EJF Investments and Fresenius Medical go up and down completely randomly.
Pair Corralation between EJF Investments and Fresenius Medical
Assuming the 90 days trading horizon EJF Investments is expected to generate 1.37 times more return on investment than Fresenius Medical. However, EJF Investments is 1.37 times more volatile than Fresenius Medical Care. It trades about 0.26 of its potential returns per unit of risk. Fresenius Medical Care is currently generating about -0.22 per unit of risk. If you would invest 11,750 in EJF Investments on October 12, 2024 and sell it today you would earn a total of 800.00 from holding EJF Investments or generate 6.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EJF Investments vs. Fresenius Medical Care
Performance |
| Timeline |
| EJF Investments |
| Fresenius Medical Care |
EJF Investments and Fresenius Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EJF Investments and Fresenius Medical
The main advantage of trading using opposite EJF Investments and Fresenius Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EJF Investments 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.| EJF Investments vs. Universal Music Group | EJF Investments vs. Liontrust Asset Management | EJF Investments vs. FC Investment Trust | EJF Investments vs. Monks Investment Trust |
| Fresenius Medical vs. Gamma Communications PLC | Fresenius Medical vs. EJF Investments | Fresenius Medical vs. Compal Electronics GDR | Fresenius Medical vs. Aeorema Communications 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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