Correlation Between Fresenius Medical and ALPS
Can any of the company-specific risk be diversified away by investing in both Fresenius Medical and ALPS 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 ALPS 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 ALPS, you can compare the effects of market volatilities on Fresenius Medical and ALPS 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 ALPS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fresenius Medical and ALPS.
Diversification Opportunities for Fresenius Medical and ALPS
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fresenius and ALPS is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Fresenius Medical Care and ALPS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALPS 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 ALPS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALPS has no effect on the direction of Fresenius Medical i.e., Fresenius Medical and ALPS go up and down completely randomly.
Pair Corralation between Fresenius Medical and ALPS
Considering the 90-day investment horizon Fresenius Medical Care is expected to generate 1.86 times more return on investment than ALPS. However, Fresenius Medical is 1.86 times more volatile than ALPS. It trades about 0.06 of its potential returns per unit of risk. ALPS is currently generating about 0.06 per unit of risk. If you would invest 1,481 in Fresenius Medical Care on September 12, 2024 and sell it today you would earn a total of 900.00 from holding Fresenius Medical Care or generate 60.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 92.93% |
| Values | Daily Returns |
Fresenius Medical Care vs. ALPS
Performance |
| Timeline |
| Fresenius Medical Care |
| ALPS |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Strong
Fresenius Medical and ALPS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fresenius Medical and ALPS
The main advantage of trading using opposite Fresenius Medical and ALPS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fresenius Medical position performs unexpectedly, ALPS 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 ALPS will offset losses from the drop in ALPS's long position.| Fresenius Medical vs. Universal Health Services | Fresenius Medical vs. Addus HomeCare | Fresenius Medical vs. HCA Holdings | Fresenius Medical vs. Tenet Healthcare |
| ALPS vs. Defiance Hotel Airline | ALPS vs. AdvisorShares Hotel ETF | ALPS vs. Direxion Daily Travel | ALPS vs. Amplify ETF Trust |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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