Correlation Between AMN Healthcare and TransMedics
Can any of the company-specific risk be diversified away by investing in both AMN Healthcare and TransMedics 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 TransMedics 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 TransMedics Group, you can compare the effects of market volatilities on AMN Healthcare and TransMedics 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 TransMedics. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMN Healthcare and TransMedics.
Diversification Opportunities for AMN Healthcare and TransMedics
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between AMN and TransMedics is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding AMN Healthcare Services and TransMedics Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TransMedics Group 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 TransMedics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TransMedics Group has no effect on the direction of AMN Healthcare i.e., AMN Healthcare and TransMedics go up and down completely randomly.
Pair Corralation between AMN Healthcare and TransMedics
Considering the 90-day investment horizon AMN Healthcare Services is expected to generate 1.03 times more return on investment than TransMedics. However, AMN Healthcare is 1.03 times more volatile than TransMedics Group. It trades about -0.2 of its potential returns per unit of risk. TransMedics Group is currently generating about -0.26 per unit of risk. If you would invest 4,000 in AMN Healthcare Services on August 27, 2024 and sell it today you would lose (1,284) from holding AMN Healthcare Services or give up 32.1% 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. TransMedics Group
Performance |
| Timeline |
| AMN Healthcare Services |
| TransMedics Group |
AMN Healthcare and TransMedics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AMN Healthcare and TransMedics
The main advantage of trading using opposite AMN Healthcare and TransMedics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMN Healthcare position performs unexpectedly, TransMedics 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 TransMedics will offset losses from the drop in TransMedics' long position.| AMN Healthcare vs. Option Care Health | AMN Healthcare vs. Addus HomeCare | AMN Healthcare vs. Acadia Healthcare | AMN Healthcare vs. Encompass Health Corp |
| TransMedics vs. Inspire Medical Systems | TransMedics vs. Inari Medical | TransMedics vs. InMode | TransMedics vs. Insulet |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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