Correlation Between Mednax and CVS Health
Can any of the company-specific risk be diversified away by investing in both Mednax and CVS Health 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 CVS Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mednax Inc and CVS Health Corp, you can compare the effects of market volatilities on Mednax and CVS Health 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 CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mednax and CVS Health.
Diversification Opportunities for Mednax and CVS Health
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Mednax and CVS is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Mednax Inc and CVS Health Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS Health Corp 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 CVS Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVS Health Corp has no effect on the direction of Mednax i.e., Mednax and CVS Health go up and down completely randomly.
Pair Corralation between Mednax and CVS Health
Allowing for the 90-day total investment horizon Mednax Inc is expected to under-perform the CVS Health. But the stock apears to be less risky and, when comparing its historical volatility, Mednax Inc is 1.81 times less risky than CVS Health. The stock trades about -0.01 of its potential returns per unit of risk. The CVS Health Corp is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 5,465 in CVS Health Corp on September 4, 2024 and sell it today you would earn a total of 443.00 from holding CVS Health Corp or generate 8.11% 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. CVS Health Corp
Performance |
| Timeline |
| Mednax Inc |
| CVS Health Corp |
Mednax and CVS Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mednax and CVS Health
The main advantage of trading using opposite Mednax and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mednax position performs unexpectedly, CVS Health 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 CVS Health will offset losses from the drop in CVS Health's long position.| Mednax vs. Acadia Healthcare | Mednax vs. Select Medical Holdings | Mednax vs. Universal Health Services | Mednax vs. Prestige Brand Holdings |
| CVS Health vs. Humana Inc | CVS Health vs. Cigna Corp | CVS Health vs. Elevance Health | CVS Health vs. Centene 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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