Correlation Between Smith Nephew and Fresenius Medical
Can any of the company-specific risk be diversified away by investing in both Smith Nephew 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 Smith Nephew and Fresenius Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smith Nephew SNATS and Fresenius Medical Care, you can compare the effects of market volatilities on Smith Nephew 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 Smith Nephew with a short position of Fresenius Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smith Nephew and Fresenius Medical.
Diversification Opportunities for Smith Nephew and Fresenius Medical
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Smith and Fresenius is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Smith Nephew SNATS 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 Smith Nephew 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 Smith Nephew SNATS 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 Smith Nephew i.e., Smith Nephew and Fresenius Medical go up and down completely randomly.
Pair Corralation between Smith Nephew and Fresenius Medical
Considering the 90-day investment horizon Smith Nephew is expected to generate 8.92 times less return on investment than Fresenius Medical. But when comparing it to its historical volatility, Smith Nephew SNATS is 1.22 times less risky than Fresenius Medical. It trades about 0.06 of its potential returns per unit of risk. Fresenius Medical Care is currently generating about 0.41 of returns per unit of risk over similar time horizon. 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 Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smith Nephew SNATS vs. Fresenius Medical Care
Performance |
| Timeline |
| Smith Nephew SNATS |
| Fresenius Medical Care |
Smith Nephew and Fresenius Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smith Nephew and Fresenius Medical
The main advantage of trading using opposite Smith Nephew and Fresenius Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smith Nephew 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.| Smith Nephew vs. CochLear Ltd ADR | Smith Nephew vs. Integer Holdings Corp | Smith Nephew vs. Orthofix Medical | Smith Nephew vs. Glaukos Corp |
| Fresenius Medical vs. Universal Health Services | Fresenius Medical vs. Addus HomeCare | Fresenius Medical vs. HCA Holdings | Fresenius Medical vs. Tenet Healthcare |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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