Correlation Between Fresenius and WashTec AG
Can any of the company-specific risk be diversified away by investing in both Fresenius and WashTec AG 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 WashTec AG 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 WashTec AG, you can compare the effects of market volatilities on Fresenius and WashTec AG 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 WashTec AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fresenius and WashTec AG.
Diversification Opportunities for Fresenius and WashTec AG
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Fresenius and WashTec is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Fresenius SE Co and WashTec AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WashTec AG 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 WashTec AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WashTec AG has no effect on the direction of Fresenius i.e., Fresenius and WashTec AG go up and down completely randomly.
Pair Corralation between Fresenius and WashTec AG
Assuming the 90 days horizon Fresenius SE Co is expected to generate 1.59 times more return on investment than WashTec AG. However, Fresenius is 1.59 times more volatile than WashTec AG. It trades about 0.12 of its potential returns per unit of risk. WashTec AG is currently generating about 0.05 per unit of risk. If you would invest 2,805 in Fresenius SE Co on December 10, 2024 and sell it today you would earn a total of 1,296 from holding Fresenius SE Co or generate 46.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 33.58% |
| Values | Daily Returns |
Fresenius SE Co vs. WashTec AG
Performance |
| Timeline |
| Fresenius SE |
| WashTec AG |
Fresenius and WashTec AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fresenius and WashTec AG
The main advantage of trading using opposite Fresenius and WashTec AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fresenius position performs unexpectedly, WashTec AG 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 WashTec AG will offset losses from the drop in WashTec AG's long position.| Fresenius vs. Medical Facilities | ||
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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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