Correlation Between CareMax and R1 RCM
Can any of the company-specific risk be diversified away by investing in both CareMax and R1 RCM 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 CareMax and R1 RCM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CareMax and R1 RCM Inc, you can compare the effects of market volatilities on CareMax and R1 RCM 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 CareMax with a short position of R1 RCM. Check out your portfolio center. Please also check ongoing floating volatility patterns of CareMax and R1 RCM.
Diversification Opportunities for CareMax and R1 RCM
Excellent diversification
The 3 months correlation between CareMax and RCM is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding CareMax and R1 RCM Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on R1 RCM Inc and CareMax 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 CareMax are associated (or correlated) with R1 RCM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of R1 RCM Inc has no effect on the direction of CareMax i.e., CareMax and R1 RCM go up and down completely randomly.
Pair Corralation between CareMax and R1 RCM
Given the investment horizon of 90 days CareMax is expected to under-perform the R1 RCM. In addition to that, CareMax is 273.53 times more volatile than R1 RCM Inc. It trades about -0.19 of its total potential returns per unit of risk. R1 RCM Inc is currently generating about 0.54 per unit of volatility. If you would invest 1,424 in R1 RCM Inc on August 25, 2024 and sell it today you would earn a total of 7.00 from holding R1 RCM Inc or generate 0.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 82.61% |
| Values | Daily Returns |
CareMax vs. R1 RCM Inc
Performance |
| Timeline |
| CareMax |
| R1 RCM Inc |
CareMax and R1 RCM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CareMax and R1 RCM
The main advantage of trading using opposite CareMax and R1 RCM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CareMax position performs unexpectedly, R1 RCM 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 R1 RCM will offset losses from the drop in R1 RCM's long position.The idea behind CareMax and R1 RCM Inc 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.| R1 RCM vs. National Research Corp | R1 RCM vs. Definitive Healthcare Corp | R1 RCM vs. HealthStream | R1 RCM vs. Evolent Health |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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