Correlation Between Visa and Fresenius Medical
Can any of the company-specific risk be diversified away by investing in both Visa 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 Visa and Fresenius Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Visa Class A and Fresenius Medical Care, you can compare the effects of market volatilities on Visa 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 Visa with a short position of Fresenius Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Fresenius Medical.
Diversification Opportunities for Visa and Fresenius Medical
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Visa and Fresenius is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A 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 Visa 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 Visa Class A 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 Visa i.e., Visa and Fresenius Medical go up and down completely randomly.
Pair Corralation between Visa and Fresenius Medical
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.46 times more return on investment than Fresenius Medical. However, Visa Class A is 2.17 times less risky than Fresenius Medical. It trades about 0.09 of its potential returns per unit of risk. Fresenius Medical Care is currently generating about 0.02 per unit of risk. If you would invest 22,385 in Visa Class A on October 12, 2024 and sell it today you would earn a total of 8,875 from holding Visa Class A or generate 39.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.99% |
| Values | Daily Returns |
Visa Class A vs. Fresenius Medical Care
Performance |
| Timeline |
| Visa Class A |
| Fresenius Medical Care |
Visa and Fresenius Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Fresenius Medical
The main advantage of trading using opposite Visa and Fresenius Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa 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.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Fresenius Medical vs. Universal Health Services | Fresenius Medical vs. Superior Plus Corp | Fresenius Medical vs. NMI Holdings | Fresenius Medical vs. SIVERS SEMICONDUCTORS AB |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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