Correlation Between FMC and Deka Deutsche

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

By analyzing existing cross correlation between FMC Corporation and Deka Deutsche Boerse, you can compare the effects of market volatilities on FMC and Deka Deutsche 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 FMC with a short position of Deka Deutsche. Check out your portfolio center. Please also check ongoing floating volatility patterns of FMC and Deka Deutsche.

Diversification Opportunities for FMC and Deka Deutsche

-0.34

Correlation Coefficient

FMC  Deka Deutsche

Very good diversification

The 3 months correlation between FMC and Deka is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding FMC Corp. and Deka Deutsche Boerse in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deka Deutsche Boerse and FMC 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 FMC Corporation are associated (or correlated) with Deka Deutsche. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deka Deutsche Boerse has no effect on the direction of FMC i.e., FMC and Deka Deutsche go up and down completely randomly.

Pair Corralation between FMC and Deka Deutsche

Considering the 90-day investment horizon FMC Corporation is expected to under-perform the Deka Deutsche. In addition to that, FMC is 12.29 times more volatile than Deka Deutsche Boerse. It trades about -0.29 of its total potential returns per unit of risk. Deka Deutsche Boerse is currently generating about 0.08 per unit of volatility. If you would invest  8,967  in Deka Deutsche Boerse on October 6, 2024 and sell it today you would earn a total of  51.00  from holding Deka Deutsche Boerse or generate 0.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.56%
Values	Daily Returns

FMC Corp.  vs.  Deka Deutsche Boerse

FMC Corporation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FMC Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's primary indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Deka Deutsche Boerse

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Deka Deutsche Boerse has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Deka Deutsche is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with FMC and Deka Deutsche

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

The idea behind FMC Corporation and Deka Deutsche Boerse 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.