Correlation Between Fresenius Medical and AdvisorShares Hotel
Can any of the company-specific risk be diversified away by investing in both Fresenius Medical and AdvisorShares Hotel 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 AdvisorShares Hotel 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 AdvisorShares Hotel ETF, you can compare the effects of market volatilities on Fresenius Medical and AdvisorShares Hotel 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 AdvisorShares Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fresenius Medical and AdvisorShares Hotel.
Diversification Opportunities for Fresenius Medical and AdvisorShares Hotel
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fresenius and AdvisorShares is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Fresenius Medical Care and AdvisorShares Hotel ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdvisorShares Hotel ETF 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 AdvisorShares Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AdvisorShares Hotel ETF has no effect on the direction of Fresenius Medical i.e., Fresenius Medical and AdvisorShares Hotel go up and down completely randomly.
Pair Corralation between Fresenius Medical and AdvisorShares Hotel
Considering the 90-day investment horizon Fresenius Medical Care is expected to generate 1.82 times more return on investment than AdvisorShares Hotel. However, Fresenius Medical is 1.82 times more volatile than AdvisorShares Hotel ETF. It trades about 0.05 of its potential returns per unit of risk. AdvisorShares Hotel ETF is currently generating about 0.07 per unit of risk. If you would invest 1,528 in Fresenius Medical Care on September 3, 2024 and sell it today you would earn a total of 674.00 from holding Fresenius Medical Care or generate 44.11% 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. AdvisorShares Hotel ETF
Performance |
| Timeline |
| Fresenius Medical Care |
| AdvisorShares Hotel ETF |
Fresenius Medical and AdvisorShares Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fresenius Medical and AdvisorShares Hotel
The main advantage of trading using opposite Fresenius Medical and AdvisorShares Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fresenius Medical position performs unexpectedly, AdvisorShares Hotel 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 AdvisorShares Hotel will offset losses from the drop in AdvisorShares Hotel's long position.| Fresenius Medical vs. Universal Health Services | Fresenius Medical vs. Addus HomeCare | Fresenius Medical vs. HCA Holdings | Fresenius Medical vs. Tenet Healthcare |
| AdvisorShares Hotel vs. Smith Nephew SNATS | AdvisorShares Hotel vs. Fresenius Medical Care | AdvisorShares Hotel vs. Fomento Economico Mexicano | AdvisorShares Hotel vs. The Cooper Companies, |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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