Correlation Between CVB Financial and Fresenius

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

By analyzing existing cross correlation between CVB Financial Corp and Fresenius SE Co, you can compare the effects of market volatilities on CVB Financial and Fresenius 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 CVB Financial with a short position of Fresenius. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVB Financial and Fresenius.

Diversification Opportunities for CVB Financial and Fresenius

-0.25

Correlation Coefficient

CVB Financial  Fresenius

Very good diversification

The 3 months correlation between CVB and Fresenius is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding CVB Financial Corp and Fresenius SE Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fresenius SE and CVB Financial 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 CVB Financial Corp are associated (or correlated) with Fresenius. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fresenius SE has no effect on the direction of CVB Financial i.e., CVB Financial and Fresenius go up and down completely randomly.

Pair Corralation between CVB Financial and Fresenius

Assuming the 90 days horizon CVB Financial Corp is expected to generate 2.66 times more return on investment than Fresenius. However, CVB Financial is 2.66 times more volatile than Fresenius SE Co. It trades about 0.13 of its potential returns per unit of risk. Fresenius SE Co is currently generating about 0.03 per unit of risk. If you would invest  1,624  in CVB Financial Corp on October 10, 2024 and sell it today you would earn a total of  396.00  from holding CVB Financial Corp or generate 24.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

CVB Financial Corp  vs.  Fresenius SE Co

CVB Financial Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CVB Financial Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CVB Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Fresenius SE

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fresenius SE Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Fresenius is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with CVB Financial and Fresenius

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

The idea behind CVB Financial Corp and Fresenius SE Co 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.