Correlation Between Mednax and Smith Nephew
Can any of the company-specific risk be diversified away by investing in both Mednax and Smith Nephew 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 Smith Nephew into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mednax Inc and Smith Nephew SNATS, you can compare the effects of market volatilities on Mednax and Smith Nephew 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 Smith Nephew. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mednax and Smith Nephew.
Diversification Opportunities for Mednax and Smith Nephew
-0.94 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Mednax and Smith is -0.94. Overlapping area represents the amount of risk that can be diversified away by holding Mednax Inc and Smith Nephew SNATS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smith Nephew SNATS 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 Smith Nephew. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smith Nephew SNATS has no effect on the direction of Mednax i.e., Mednax and Smith Nephew go up and down completely randomly.
Pair Corralation between Mednax and Smith Nephew
Allowing for the 90-day total investment horizon Mednax Inc is expected to under-perform the Smith Nephew. In addition to that, Mednax is 1.42 times more volatile than Smith Nephew SNATS. It trades about -0.03 of its total potential returns per unit of risk. Smith Nephew SNATS is currently generating about 0.08 per unit of volatility. If you would invest 2,524 in Smith Nephew SNATS on September 2, 2024 and sell it today you would earn a total of 54.00 from holding Smith Nephew SNATS or generate 2.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mednax Inc vs. Smith Nephew SNATS
Performance |
| Timeline |
| Mednax Inc |
| Smith Nephew SNATS |
Mednax and Smith Nephew Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mednax and Smith Nephew
The main advantage of trading using opposite Mednax and Smith Nephew positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mednax position performs unexpectedly, Smith Nephew 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 Smith Nephew will offset losses from the drop in Smith Nephew's long position.| Mednax vs. Acadia Healthcare | Mednax vs. Select Medical Holdings | Mednax vs. Universal Health Services | Mednax vs. Prestige Brand Holdings |
| Smith Nephew vs. CochLear Ltd ADR | Smith Nephew vs. Integer Holdings Corp | Smith Nephew vs. Orthofix Medical | Smith Nephew vs. Glaukos 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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