Correlation Between Fresenius Medical and Iron Mountain

Can any of the company-specific risk be diversified away by investing in both Fresenius Medical and Iron Mountain 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 Fresenius Medical and Iron Mountain into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fresenius Medical Care and Iron Mountain, you can compare the effects of market volatilities on Fresenius Medical and Iron Mountain 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 Fresenius Medical with a short position of Iron Mountain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fresenius Medical and Iron Mountain.

Diversification Opportunities for Fresenius Medical and Iron Mountain

-0.63

Correlation Coefficient

Fresenius Medical  Iron Mountain

Excellent diversification

The 3 months correlation between Fresenius and Iron is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Fresenius Medical Care and Iron Mountain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iron Mountain and Fresenius Medical 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 Fresenius Medical Care are associated (or correlated) with Iron Mountain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iron Mountain has no effect on the direction of Fresenius Medical i.e., Fresenius Medical and Iron Mountain go up and down completely randomly.

Pair Corralation between Fresenius Medical and Iron Mountain

Assuming the 90 days trading horizon Fresenius Medical Care is expected to generate 0.9 times more return on investment than Iron Mountain. However, Fresenius Medical Care is 1.12 times less risky than Iron Mountain. It trades about 0.11 of its potential returns per unit of risk. Iron Mountain is currently generating about 0.06 per unit of risk. If you would invest  3,617  in Fresenius Medical Care on October 4, 2024 and sell it today you would earn a total of  812.00  from holding Fresenius Medical Care or generate 22.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.43%
Values	Daily Returns

Fresenius Medical Care  vs.  Iron Mountain

Fresenius Medical Care

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fresenius Medical Care are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Fresenius Medical unveiled solid returns over the last few months and may actually be approaching a breakup point.

Iron Mountain

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Iron Mountain has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Fresenius Medical and Iron Mountain

The main advantage of trading using opposite Fresenius Medical and Iron Mountain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fresenius Medical position performs unexpectedly, Iron Mountain 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 Iron Mountain will offset losses from the drop in Iron Mountain's long position.

The idea behind Fresenius Medical Care and Iron Mountain pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.