Correlation Between Mednax and Align Technology
Can any of the company-specific risk be diversified away by investing in both Mednax and Align Technology 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 Mednax and Align Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mednax Inc and Align Technology, you can compare the effects of market volatilities on Mednax and Align Technology 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 Mednax with a short position of Align Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mednax and Align Technology.
Diversification Opportunities for Mednax and Align Technology
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Mednax and Align is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Mednax Inc and Align Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Align Technology and Mednax 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 Mednax Inc are associated (or correlated) with Align Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Align Technology has no effect on the direction of Mednax i.e., Mednax and Align Technology go up and down completely randomly.
Pair Corralation between Mednax and Align Technology
Allowing for the 90-day total investment horizon Mednax Inc is expected to generate 3.49 times more return on investment than Align Technology. However, Mednax is 3.49 times more volatile than Align Technology. It trades about 0.06 of its potential returns per unit of risk. Align Technology is currently generating about -0.48 per unit of risk. If you would invest 1,446 in Mednax Inc on November 29, 2024 and sell it today you would earn a total of 54.00 from holding Mednax Inc or generate 3.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mednax Inc vs. Align Technology
Performance |
| Timeline |
| Mednax Inc |
| Align Technology |
Mednax and Align Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mednax and Align Technology
The main advantage of trading using opposite Mednax and Align Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mednax position performs unexpectedly, Align Technology 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 Align Technology will offset losses from the drop in Align Technology's long position.| Mednax vs. Acadia Healthcare | Mednax vs. Select Medical Holdings | Mednax vs. Universal Health Services | Mednax vs. Prestige Brand Holdings |
| Align Technology vs. Insulet | Align Technology vs. Tandem Diabetes Care | Align Technology vs. Abbott Laboratories | Align Technology vs. Stryker |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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