Correlation Between Fresenius and ModivCare

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Can any of the company-specific risk be diversified away by investing in both Fresenius and ModivCare 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 ModivCare 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 ModivCare, you can compare the effects of market volatilities on Fresenius and ModivCare 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 ModivCare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fresenius and ModivCare.

Diversification Opportunities for Fresenius and ModivCare

0.37
  Correlation Coefficient

Weak diversification

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

Pair Corralation between Fresenius and ModivCare

Assuming the 90 days horizon Fresenius SE Co is expected to generate 0.22 times more return on investment than ModivCare. However, Fresenius SE Co is 4.62 times less risky than ModivCare. It trades about -0.08 of its potential returns per unit of risk. ModivCare is currently generating about -0.1 per unit of risk. If you would invest  3,750  in Fresenius SE Co on October 21, 2024 and sell it today you would lose (353.00) from holding Fresenius SE Co or give up 9.41% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Fresenius SE Co  vs.  ModivCare

 Performance 
       Timeline  
Fresenius SE 

Risk-Adjusted Performance

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Weak
 
Strong
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.
ModivCare 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days ModivCare 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 fundamental indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Fresenius and ModivCare Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Fresenius and ModivCare

The main advantage of trading using opposite Fresenius and ModivCare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fresenius position performs unexpectedly, ModivCare 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 ModivCare will offset losses from the drop in ModivCare's long position.
The idea behind Fresenius SE Co and ModivCare 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.

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