Correlation Between FMC and Kemper

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

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

Diversification Opportunities for FMC and Kemper

-0.37

Correlation Coefficient

FMC  Kemper

Very good diversification

The 3 months correlation between FMC and Kemper is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding FMC Corp. and Kemper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kemper 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 Kemper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kemper has no effect on the direction of FMC i.e., FMC and Kemper go up and down completely randomly.

Pair Corralation between FMC and Kemper

Considering the 90-day investment horizon FMC Corporation is expected to under-perform the Kemper. In addition to that, FMC is 1.25 times more volatile than Kemper. It trades about -0.06 of its total potential returns per unit of risk. Kemper is currently generating about -0.03 per unit of volatility. If you would invest  6,600  in Kemper on October 21, 2024 and sell it today you would lose (150.00) from holding Kemper or give up 2.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.5%
Values	Daily Returns

FMC Corp.  vs.  Kemper

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 latest fragile performance, the Stock's primary indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Kemper

Risk-Adjusted Performance

7 of 100

OK

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

Pair Trading with FMC and Kemper

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

The idea behind FMC Corporation and Kemper 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.