Correlation Between Fresenius and COMMERCIAL VEHICLE
Can any of the company-specific risk be diversified away by investing in both Fresenius and COMMERCIAL VEHICLE 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 and COMMERCIAL VEHICLE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fresenius SE Co and COMMERCIAL VEHICLE, you can compare the effects of market volatilities on Fresenius and COMMERCIAL VEHICLE 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 with a short position of COMMERCIAL VEHICLE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fresenius and COMMERCIAL VEHICLE.
Diversification Opportunities for Fresenius and COMMERCIAL VEHICLE
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Fresenius and COMMERCIAL is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Fresenius SE Co and COMMERCIAL VEHICLE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COMMERCIAL VEHICLE and Fresenius 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 SE Co are associated (or correlated) with COMMERCIAL VEHICLE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COMMERCIAL VEHICLE has no effect on the direction of Fresenius i.e., Fresenius and COMMERCIAL VEHICLE go up and down completely randomly.
Pair Corralation between Fresenius and COMMERCIAL VEHICLE
Assuming the 90 days trading horizon Fresenius SE Co is expected to generate 0.23 times more return on investment than COMMERCIAL VEHICLE. However, Fresenius SE Co is 4.44 times less risky than COMMERCIAL VEHICLE. It trades about 0.06 of its potential returns per unit of risk. COMMERCIAL VEHICLE is currently generating about -0.01 per unit of risk. If you would invest 3,350 in Fresenius SE Co on September 12, 2024 and sell it today you would earn a total of 39.00 from holding Fresenius SE Co or generate 1.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fresenius SE Co vs. COMMERCIAL VEHICLE
Performance |
| Timeline |
| Fresenius SE |
| COMMERCIAL VEHICLE |
Fresenius and COMMERCIAL VEHICLE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fresenius and COMMERCIAL VEHICLE
The main advantage of trading using opposite Fresenius and COMMERCIAL VEHICLE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fresenius position performs unexpectedly, COMMERCIAL VEHICLE 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 COMMERCIAL VEHICLE will offset losses from the drop in COMMERCIAL VEHICLE's long position.| Fresenius vs. AIR PRODCHEMICALS | Fresenius vs. SIDETRADE EO 1 | Fresenius vs. Fast Retailing Co | Fresenius vs. SHIN ETSU CHEMICAL |
| COMMERCIAL VEHICLE vs. Taylor Morrison Home | COMMERCIAL VEHICLE vs. Haier Smart Home | COMMERCIAL VEHICLE vs. LANDSEA HOMES P | COMMERCIAL VEHICLE vs. Western Copper and |
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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