Correlation Between Mednax and Community Health
Can any of the company-specific risk be diversified away by investing in both Mednax and Community 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 Community 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 Community Health Systems, you can compare the effects of market volatilities on Mednax and Community 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 Community Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mednax and Community Health.
Diversification Opportunities for Mednax and Community Health
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Mednax and Community is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Mednax Inc and Community Health Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Community Health Systems 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 Community Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Community Health Systems has no effect on the direction of Mednax i.e., Mednax and Community Health go up and down completely randomly.
Pair Corralation between Mednax and Community Health
Allowing for the 90-day total investment horizon Mednax Inc is expected to generate 1.71 times more return on investment than Community Health. However, Mednax is 1.71 times more volatile than Community Health Systems. It trades about 0.14 of its potential returns per unit of risk. Community Health Systems is currently generating about -0.13 per unit of risk. If you would invest 1,286 in Mednax Inc on August 28, 2024 and sell it today you would earn a total of 190.00 from holding Mednax Inc or generate 14.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mednax Inc vs. Community Health Systems
Performance |
| Timeline |
| Mednax Inc |
| Community Health Systems |
Mednax and Community Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mednax and Community Health
The main advantage of trading using opposite Mednax and Community Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mednax position performs unexpectedly, Community 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 Community Health will offset losses from the drop in Community Health's long position.| Mednax vs. Acadia Healthcare | Mednax vs. Select Medical Holdings | Mednax vs. Universal Health Services | Mednax vs. Prestige Brand Holdings |
| Community Health vs. Universal Health Services | Community Health vs. HCA Holdings | Community Health vs. Surgery Partners | Community Health vs. Acadia Healthcare |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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