Correlation Between Enhabit and Fresenius

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

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

Diversification Opportunities for Enhabit and Fresenius

0.83

Correlation Coefficient

Enhabit  Fresenius

Very poor diversification

The 3 months correlation between Enhabit and Fresenius is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Enhabit and Fresenius SE Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fresenius SE and Enhabit 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 Enhabit 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 Enhabit i.e., Enhabit and Fresenius go up and down completely randomly.

Pair Corralation between Enhabit and Fresenius

Given the investment horizon of 90 days Enhabit is expected to generate 1.74 times less return on investment than Fresenius. In addition to that, Enhabit is 1.45 times more volatile than Fresenius SE Co. It trades about 0.09 of its total potential returns per unit of risk. Fresenius SE Co is currently generating about 0.24 per unit of volatility. If you would invest  870.00  in Fresenius SE Co on December 30, 2024 and sell it today you would earn a total of  216.00  from holding Fresenius SE Co or generate 24.83% return on investment over 90 days.

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

Enhabit  vs.  Fresenius SE Co

Enhabit

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Enhabit are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, Enhabit sustained solid returns over the last few months and may actually be approaching a breakup point.

Fresenius SE

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fresenius SE Co are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Fresenius showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Enhabit and Fresenius

The main advantage of trading using opposite Enhabit and Fresenius positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enhabit 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 Enhabit 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.