Correlation Between Fresenius Medical and Vanguard Consumer
Can any of the company-specific risk be diversified away by investing in both Fresenius Medical and Vanguard Consumer 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 Vanguard Consumer 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 Vanguard Consumer Discretionary, you can compare the effects of market volatilities on Fresenius Medical and Vanguard Consumer 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 Vanguard Consumer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fresenius Medical and Vanguard Consumer.
Diversification Opportunities for Fresenius Medical and Vanguard Consumer
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fresenius and Vanguard is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Fresenius Medical Care and Vanguard Consumer Discretionar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Consumer 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 Vanguard Consumer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Consumer has no effect on the direction of Fresenius Medical i.e., Fresenius Medical and Vanguard Consumer go up and down completely randomly.
Pair Corralation between Fresenius Medical and Vanguard Consumer
Considering the 90-day investment horizon Fresenius Medical is expected to generate 2.62 times less return on investment than Vanguard Consumer. In addition to that, Fresenius Medical is 1.48 times more volatile than Vanguard Consumer Discretionary. It trades about 0.03 of its total potential returns per unit of risk. Vanguard Consumer Discretionary is currently generating about 0.12 per unit of volatility. If you would invest 30,892 in Vanguard Consumer Discretionary on September 3, 2024 and sell it today you would earn a total of 6,725 from holding Vanguard Consumer Discretionary or generate 21.77% 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. Vanguard Consumer Discretionar
Performance |
| Timeline |
| Fresenius Medical Care |
| Vanguard Consumer |
Fresenius Medical and Vanguard Consumer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fresenius Medical and Vanguard Consumer
The main advantage of trading using opposite Fresenius Medical and Vanguard Consumer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fresenius Medical position performs unexpectedly, Vanguard Consumer 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 Vanguard Consumer will offset losses from the drop in Vanguard Consumer's long position.| Fresenius Medical vs. Universal Health Services | Fresenius Medical vs. Addus HomeCare | Fresenius Medical vs. HCA Holdings | Fresenius Medical vs. Tenet Healthcare |
| Vanguard Consumer vs. Smith Nephew SNATS | Vanguard Consumer vs. Fresenius Medical Care | Vanguard Consumer vs. Fomento Economico Mexicano | Vanguard Consumer 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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