Correlation Between Fresenius Medical and Defiance Hotel
Can any of the company-specific risk be diversified away by investing in both Fresenius Medical and Defiance 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 Defiance 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 Defiance Hotel Airline, you can compare the effects of market volatilities on Fresenius Medical and Defiance 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 Defiance Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fresenius Medical and Defiance Hotel.
Diversification Opportunities for Fresenius Medical and Defiance Hotel
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fresenius and Defiance is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Fresenius Medical Care and Defiance Hotel Airline in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Defiance Hotel Airline 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 Defiance Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Defiance Hotel Airline has no effect on the direction of Fresenius Medical i.e., Fresenius Medical and Defiance Hotel go up and down completely randomly.
Pair Corralation between Fresenius Medical and Defiance Hotel
Considering the 90-day investment horizon Fresenius Medical is expected to generate 1.45 times less return on investment than Defiance Hotel. In addition to that, Fresenius Medical is 1.79 times more volatile than Defiance Hotel Airline. It trades about 0.04 of its total potential returns per unit of risk. Defiance Hotel Airline is currently generating about 0.11 per unit of volatility. If you would invest 2,052 in Defiance Hotel Airline on September 4, 2024 and sell it today you would earn a total of 651.00 from holding Defiance Hotel Airline or generate 31.73% 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. Defiance Hotel Airline
Performance |
| Timeline |
| Fresenius Medical Care |
| Defiance Hotel Airline |
Fresenius Medical and Defiance Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fresenius Medical and Defiance Hotel
The main advantage of trading using opposite Fresenius Medical and Defiance Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fresenius Medical position performs unexpectedly, Defiance 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 Defiance Hotel will offset losses from the drop in Defiance 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 |
| Defiance Hotel vs. Smith Nephew SNATS | Defiance Hotel vs. Fresenius Medical Care | Defiance Hotel vs. Fomento Economico Mexicano | Defiance 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
Other Complementary Tools
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Stocks Directory Find actively traded stocks across global markets | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets |