Correlation Between Fresenius Medical and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Fresenius Medical and Dow Jones 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 Fresenius Medical and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fresenius Medical Care and Dow Jones Industrial, you can compare the effects of market volatilities on Fresenius Medical and Dow Jones 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 Fresenius Medical with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fresenius Medical and Dow Jones.
Diversification Opportunities for Fresenius Medical and Dow Jones
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fresenius and Dow is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Fresenius Medical Care and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Fresenius Medical 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 Fresenius Medical Care are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Fresenius Medical i.e., Fresenius Medical and Dow Jones go up and down completely randomly.
Pair Corralation between Fresenius Medical and Dow Jones
Assuming the 90 days trading horizon Fresenius Medical Care is expected to generate 2.23 times more return on investment than Dow Jones. However, Fresenius Medical is 2.23 times more volatile than Dow Jones Industrial. It trades about 0.22 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.22 per unit of risk. If you would invest 3,840 in Fresenius Medical Care on August 27, 2024 and sell it today you would earn a total of 385.00 from holding Fresenius Medical Care or generate 10.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fresenius Medical Care vs. Dow Jones Industrial
Performance |
| Timeline |
Fresenius Medical and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Fresenius Medical Care
Pair trading matchups for Fresenius Medical
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Fresenius Medical and Dow Jones
The main advantage of trading using opposite Fresenius Medical and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fresenius Medical position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Fresenius Medical vs. Option Care Health | Fresenius Medical vs. HYGEIA HC HLDGS | Fresenius Medical vs. Superior Plus Corp | Fresenius Medical vs. Origin Agritech |
| Dow Jones vs. MI Homes | Dow Jones vs. Franklin Street Properties | Dow Jones vs. Summit Hotel Properties | Dow Jones vs. Portillos |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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