Correlation Between United Utilities and Fresenius Medical
Can any of the company-specific risk be diversified away by investing in both United Utilities 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 United Utilities and Fresenius Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Utilities Group and Fresenius Medical Care, you can compare the effects of market volatilities on United Utilities 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 United Utilities with a short position of Fresenius Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Utilities and Fresenius Medical.
Diversification Opportunities for United Utilities and Fresenius Medical
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between United and Fresenius is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding United Utilities 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 United Utilities 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 United Utilities 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 United Utilities i.e., United Utilities and Fresenius Medical go up and down completely randomly.
Pair Corralation between United Utilities and Fresenius Medical
Assuming the 90 days trading horizon United Utilities Group is expected to under-perform the Fresenius Medical. In addition to that, United Utilities is 1.51 times more volatile than Fresenius Medical Care. It trades about -0.06 of its total potential returns per unit of risk. Fresenius Medical Care is currently generating about 0.38 per unit of volatility. If you would invest 4,348 in Fresenius Medical Care on November 2, 2024 and sell it today you would earn a total of 455.00 from holding Fresenius Medical Care or generate 10.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Utilities Group vs. Fresenius Medical Care
Performance |
| Timeline |
| United Utilities |
| Fresenius Medical Care |
United Utilities and Fresenius Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Utilities and Fresenius Medical
The main advantage of trading using opposite United Utilities and Fresenius Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Utilities 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.| United Utilities vs. Smithson Investment Trust | United Utilities vs. Ameriprise Financial | United Utilities vs. Bankers Investment Trust | United Utilities vs. EJF Investments |
| Fresenius Medical vs. Iron Mountain | Fresenius Medical vs. International Biotechnology Trust | Fresenius Medical vs. United States Steel | Fresenius Medical vs. Impax Environmental Markets |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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