Correlation Between Fresenius Medical and Option Care
Can any of the company-specific risk be diversified away by investing in both Fresenius Medical and Option Care 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 Option Care 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 Option Care Health, you can compare the effects of market volatilities on Fresenius Medical and Option Care 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 Option Care. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fresenius Medical and Option Care.
Diversification Opportunities for Fresenius Medical and Option Care
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Fresenius and Option is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Fresenius Medical Care and Option Care Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Option Care Health 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 Option Care. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Option Care Health has no effect on the direction of Fresenius Medical i.e., Fresenius Medical and Option Care go up and down completely randomly.
Pair Corralation between Fresenius Medical and Option Care
Assuming the 90 days trading horizon Fresenius Medical is expected to generate 2.82 times less return on investment than Option Care. But when comparing it to its historical volatility, Fresenius Medical Care is 2.63 times less risky than Option Care. It trades about 0.34 of its potential returns per unit of risk. Option Care Health is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 2,240 in Option Care Health on November 2, 2024 and sell it today you would earn a total of 700.00 from holding Option Care Health or generate 31.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fresenius Medical Care vs. Option Care Health
Performance |
| Timeline |
| Fresenius Medical Care |
| Option Care Health |
Fresenius Medical and Option Care Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fresenius Medical and Option Care
The main advantage of trading using opposite Fresenius Medical and Option Care positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fresenius Medical position performs unexpectedly, Option Care 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 Option Care will offset losses from the drop in Option Care's long position.| Fresenius Medical vs. PENN Entertainment | Fresenius Medical vs. United Utilities Group | Fresenius Medical vs. Melco Resorts Entertainment | Fresenius Medical vs. Algonquin Power Utilities |
| Option Care vs. Sonic Healthcare Limited | Option Care vs. Superior Plus Corp | Option Care vs. Origin Agritech | Option Care vs. Identiv |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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