Correlation Between Prestige Brand and Mednax
Can any of the company-specific risk be diversified away by investing in both Prestige Brand and Mednax 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 Prestige Brand and Mednax into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prestige Brand Holdings and Mednax Inc, you can compare the effects of market volatilities on Prestige Brand and Mednax 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 Prestige Brand with a short position of Mednax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prestige Brand and Mednax.
Diversification Opportunities for Prestige Brand and Mednax
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Prestige and Mednax is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Prestige Brand Holdings and Mednax Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mednax Inc and Prestige Brand 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 Prestige Brand Holdings are associated (or correlated) with Mednax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mednax Inc has no effect on the direction of Prestige Brand i.e., Prestige Brand and Mednax go up and down completely randomly.
Pair Corralation between Prestige Brand and Mednax
Considering the 90-day investment horizon Prestige Brand is expected to generate 1.23 times less return on investment than Mednax. But when comparing it to its historical volatility, Prestige Brand Holdings is 4.81 times less risky than Mednax. It trades about 0.62 of its potential returns per unit of risk. Mednax Inc is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 1,255 in Mednax Inc on August 24, 2024 and sell it today you would earn a total of 220.00 from holding Mednax Inc or generate 17.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prestige Brand Holdings vs. Mednax Inc
Performance |
| Timeline |
| Prestige Brand Holdings |
| Mednax Inc |
Prestige Brand and Mednax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prestige Brand and Mednax
The main advantage of trading using opposite Prestige Brand and Mednax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prestige Brand position performs unexpectedly, Mednax 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 Mednax will offset losses from the drop in Mednax's long position.| Prestige Brand vs. Catalent | Prestige Brand vs. Amphastar P | Prestige Brand vs. ANI Pharmaceuticals | Prestige Brand vs. Alkermes Plc |
| Mednax vs. Acadia Healthcare | Mednax vs. Select Medical Holdings | Mednax vs. Universal Health Services | Mednax vs. Prestige Brand Holdings |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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