Correlation Between Fresenius Medical and Bread Financial
Can any of the company-specific risk be diversified away by investing in both Fresenius Medical and Bread Financial 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 Bread Financial 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 Bread Financial Holdings, you can compare the effects of market volatilities on Fresenius Medical and Bread Financial 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 Bread Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fresenius Medical and Bread Financial.
Diversification Opportunities for Fresenius Medical and Bread Financial
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Fresenius and Bread is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Fresenius Medical Care and Bread Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bread Financial Holdings 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 Bread Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bread Financial Holdings has no effect on the direction of Fresenius Medical i.e., Fresenius Medical and Bread Financial go up and down completely randomly.
Pair Corralation between Fresenius Medical and Bread Financial
Assuming the 90 days trading horizon Fresenius Medical Care is expected to generate 0.79 times more return on investment than Bread Financial. However, Fresenius Medical Care is 1.26 times less risky than Bread Financial. It trades about 0.11 of its potential returns per unit of risk. Bread Financial Holdings is currently generating about 0.06 per unit of risk. If you would invest 10,675 in Fresenius Medical Care on November 2, 2024 and sell it today you would earn a total of 3,014 from holding Fresenius Medical Care or generate 28.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fresenius Medical Care vs. Bread Financial Holdings
Performance |
| Timeline |
| Fresenius Medical Care |
| Bread Financial Holdings |
Fresenius Medical and Bread Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fresenius Medical and Bread Financial
The main advantage of trading using opposite Fresenius Medical and Bread Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fresenius Medical position performs unexpectedly, Bread Financial 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 Bread Financial will offset losses from the drop in Bread Financial's long position.| Fresenius Medical vs. Unity Software | Fresenius Medical vs. salesforce inc | Fresenius Medical vs. Costco Wholesale | Fresenius Medical vs. Live Nation Entertainment, |
| Bread Financial vs. Universal Health Services, | Bread Financial vs. Martin Marietta Materials, | Bread Financial vs. Taiwan Semiconductor Manufacturing | Bread Financial vs. Hospital Mater Dei |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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