Correlation Between AMN Healthcare and MSP Recovery
Can any of the company-specific risk be diversified away by investing in both AMN Healthcare and MSP Recovery 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 AMN Healthcare and MSP Recovery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AMN Healthcare Services and MSP Recovery, you can compare the effects of market volatilities on AMN Healthcare and MSP Recovery 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 AMN Healthcare with a short position of MSP Recovery. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMN Healthcare and MSP Recovery.
Diversification Opportunities for AMN Healthcare and MSP Recovery
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between AMN and MSP is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding AMN Healthcare Services and MSP Recovery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MSP Recovery and AMN Healthcare 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 AMN Healthcare Services are associated (or correlated) with MSP Recovery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MSP Recovery has no effect on the direction of AMN Healthcare i.e., AMN Healthcare and MSP Recovery go up and down completely randomly.
Pair Corralation between AMN Healthcare and MSP Recovery
Considering the 90-day investment horizon AMN Healthcare Services is expected to under-perform the MSP Recovery. But the stock apears to be less risky and, when comparing its historical volatility, AMN Healthcare Services is 3.22 times less risky than MSP Recovery. The stock trades about -0.12 of its potential returns per unit of risk. The MSP Recovery is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 0.38 in MSP Recovery on August 30, 2024 and sell it today you would lose (0.21) from holding MSP Recovery or give up 55.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
AMN Healthcare Services vs. MSP Recovery
Performance |
| Timeline |
| AMN Healthcare Services |
| MSP Recovery |
AMN Healthcare and MSP Recovery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AMN Healthcare and MSP Recovery
The main advantage of trading using opposite AMN Healthcare and MSP Recovery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMN Healthcare position performs unexpectedly, MSP Recovery 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 MSP Recovery will offset losses from the drop in MSP Recovery's long position.| AMN Healthcare vs. Humana Inc | AMN Healthcare vs. Cigna Corp | AMN Healthcare vs. Elevance Health | AMN Healthcare vs. Centene Corp |
| MSP Recovery vs. Aptiv PLC | MSP Recovery vs. Li Auto | MSP Recovery vs. MGIC Investment Corp | MSP Recovery vs. Assurant |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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