Correlation Between Fresenius and Aveanna Healthcare

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

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

Diversification Opportunities for Fresenius and Aveanna Healthcare

-0.2

Correlation Coefficient

Fresenius  Aveanna Healthcare

Good diversification

The 3 months correlation between Fresenius and Aveanna is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Fresenius SE Co and Aveanna Healthcare Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aveanna Healthcare and Fresenius 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 SE Co are associated (or correlated) with Aveanna Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aveanna Healthcare has no effect on the direction of Fresenius i.e., Fresenius and Aveanna Healthcare go up and down completely randomly.

Pair Corralation between Fresenius and Aveanna Healthcare

Assuming the 90 days horizon Fresenius SE Co is expected to generate 0.43 times more return on investment than Aveanna Healthcare. However, Fresenius SE Co is 2.34 times less risky than Aveanna Healthcare. It trades about -0.22 of its potential returns per unit of risk. Aveanna Healthcare Holdings is currently generating about -0.28 per unit of risk. If you would invest  3,466  in Fresenius SE Co on October 6, 2024 and sell it today you would lose (181.00) from holding Fresenius SE Co or give up 5.22% of portfolio value over 90 days.

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

Fresenius SE Co  vs.  Aveanna Healthcare Holdings

Fresenius SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fresenius SE Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Aveanna Healthcare

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Aveanna Healthcare Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Aveanna Healthcare demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fresenius and Aveanna Healthcare

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

The idea behind Fresenius SE Co and Aveanna Healthcare Holdings 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.

Check out your portfolio center.

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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..