Correlation Between Universal Health and Fresenius Medical
Can any of the company-specific risk be diversified away by investing in both Universal Health 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 Universal Health and Fresenius Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Health Services and Fresenius Medical Care, you can compare the effects of market volatilities on Universal Health 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 Universal Health with a short position of Fresenius Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Health and Fresenius Medical.
Diversification Opportunities for Universal Health and Fresenius Medical
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Universal and Fresenius is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Universal Health Services 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 Universal Health 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 Universal Health Services 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 Universal Health i.e., Universal Health and Fresenius Medical go up and down completely randomly.
Pair Corralation between Universal Health and Fresenius Medical
Assuming the 90 days horizon Universal Health Services is expected to generate 0.96 times more return on investment than Fresenius Medical. However, Universal Health Services is 1.04 times less risky than Fresenius Medical. It trades about 0.05 of its potential returns per unit of risk. Fresenius Medical Care is currently generating about -0.09 per unit of risk. If you would invest 18,200 in Universal Health Services on October 12, 2024 and sell it today you would earn a total of 200.00 from holding Universal Health Services or generate 1.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Health Services vs. Fresenius Medical Care
Performance |
| Timeline |
| Universal Health Services |
| Fresenius Medical Care |
Universal Health and Fresenius Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Health and Fresenius Medical
The main advantage of trading using opposite Universal Health and Fresenius Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Health 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.| Universal Health vs. Superior Plus Corp | Universal Health vs. NMI Holdings | Universal Health vs. SIVERS SEMICONDUCTORS AB | Universal Health vs. Talanx AG |
| Fresenius Medical vs. AM EAGLE OUTFITTERS | Fresenius Medical vs. Hemisphere Energy Corp | Fresenius Medical vs. Ribbon Communications | Fresenius Medical vs. GMO Internet |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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