Correlation Between Fresenius and ModivCare
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
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 Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Fresenius SE Co vs. ModivCare
Performance |
Timeline |
Fresenius SE |
ModivCare |
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.Fresenius vs. Medical Facilities | Fresenius vs. Sienna Senior Living | Fresenius vs. Regional Health Properties | Fresenius vs. WashTec AG |
ModivCare vs. The Ensign Group | ModivCare vs. Select Medical Holdings | ModivCare vs. Encompass Health Corp | ModivCare vs. InnovAge Holding Corp |
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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