Correlation Between InterContinental and Fresenius Medical
Can any of the company-specific risk be diversified away by investing in both InterContinental and Fresenius Medical 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 InterContinental and Fresenius Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between InterContinental Hotels Group and Fresenius Medical Care, you can compare the effects of market volatilities on InterContinental and Fresenius Medical 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 InterContinental with a short position of Fresenius Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of InterContinental and Fresenius Medical.
Diversification Opportunities for InterContinental and Fresenius Medical
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between InterContinental and Fresenius is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding InterContinental Hotels Group and Fresenius Medical Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fresenius Medical Care and InterContinental 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 InterContinental Hotels Group are associated (or correlated) with Fresenius Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fresenius Medical Care has no effect on the direction of InterContinental i.e., InterContinental and Fresenius Medical go up and down completely randomly.
Pair Corralation between InterContinental and Fresenius Medical
Assuming the 90 days trading horizon InterContinental Hotels Group is expected to generate 0.62 times more return on investment than Fresenius Medical. However, InterContinental Hotels Group is 1.62 times less risky than Fresenius Medical. It trades about 0.48 of its potential returns per unit of risk. Fresenius Medical Care is currently generating about 0.23 per unit of risk. If you would invest 857,600 in InterContinental Hotels Group on August 28, 2024 and sell it today you would earn a total of 122,400 from holding InterContinental Hotels Group or generate 14.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
InterContinental Hotels Group vs. Fresenius Medical Care
Performance |
| Timeline |
| InterContinental Hotels |
| Fresenius Medical Care |
InterContinental and Fresenius Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InterContinental and Fresenius Medical
The main advantage of trading using opposite InterContinental and Fresenius Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InterContinental position performs unexpectedly, Fresenius Medical 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 Fresenius Medical will offset losses from the drop in Fresenius Medical's long position.| InterContinental vs. Chocoladefabriken Lindt Spruengli | InterContinental vs. National Atomic Co | InterContinental vs. OTP Bank Nyrt | InterContinental vs. Samsung Electronics Co |
| Fresenius Medical vs. PPHE Hotel Group | Fresenius Medical vs. Park Hotels Resorts | Fresenius Medical vs. Electronic Arts | Fresenius Medical vs. Fidelity National Information |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like |