Correlation Between Fresenius Medical and SPDR SP
Can any of the company-specific risk be diversified away by investing in both Fresenius Medical and SPDR SP 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 SPDR SP 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 SPDR SP Retail, you can compare the effects of market volatilities on Fresenius Medical and SPDR SP 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 SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fresenius Medical and SPDR SP.
Diversification Opportunities for Fresenius Medical and SPDR SP
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fresenius and SPDR is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Fresenius Medical Care and SPDR SP Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP Retail 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 SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP Retail has no effect on the direction of Fresenius Medical i.e., Fresenius Medical and SPDR SP go up and down completely randomly.
Pair Corralation between Fresenius Medical and SPDR SP
Considering the 90-day investment horizon Fresenius Medical Care is expected to generate 1.32 times more return on investment than SPDR SP. However, Fresenius Medical is 1.32 times more volatile than SPDR SP Retail. It trades about 0.41 of its potential returns per unit of risk. SPDR SP Retail is currently generating about 0.32 per unit of risk. If you would invest 2,005 in Fresenius Medical Care on September 5, 2024 and sell it today you would earn a total of 328.00 from holding Fresenius Medical Care or generate 16.36% 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. SPDR SP Retail
Performance |
| Timeline |
| Fresenius Medical Care |
| SPDR SP Retail |
Fresenius Medical and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fresenius Medical and SPDR SP
The main advantage of trading using opposite Fresenius Medical and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fresenius Medical position performs unexpectedly, SPDR SP 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 SPDR SP will offset losses from the drop in SPDR SP's long position.| Fresenius Medical vs. Universal Health Services | Fresenius Medical vs. Addus HomeCare | Fresenius Medical vs. HCA Holdings | Fresenius Medical vs. Tenet Healthcare |
| SPDR SP vs. SPDR SP Homebuilders | SPDR SP vs. Consumer Discretionary Select | SPDR SP vs. SPDR SP Metals | SPDR SP vs. Industrial Select Sector |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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