Correlation Between Select Medical and Mednax
Can any of the company-specific risk be diversified away by investing in both Select Medical 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 Select Medical and Mednax into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Select Medical Holdings and Mednax Inc, you can compare the effects of market volatilities on Select Medical 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 Select Medical with a short position of Mednax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Select Medical and Mednax.
Diversification Opportunities for Select Medical and Mednax
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Select and Mednax is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Select Medical Holdings and Mednax Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mednax Inc and Select Medical 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 Select Medical 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 Select Medical i.e., Select Medical and Mednax go up and down completely randomly.
Pair Corralation between Select Medical and Mednax
Considering the 90-day investment horizon Select Medical Holdings is expected to generate 0.7 times more return on investment than Mednax. However, Select Medical Holdings is 1.43 times less risky than Mednax. It trades about 0.07 of its potential returns per unit of risk. Mednax Inc is currently generating about 0.03 per unit of risk. If you would invest 2,716 in Select Medical Holdings on August 27, 2024 and sell it today you would earn a total of 1,251 from holding Select Medical Holdings or generate 46.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Select Medical Holdings vs. Mednax Inc
Performance |
| Timeline |
| Select Medical Holdings |
| Mednax Inc |
Select Medical and Mednax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Select Medical and Mednax
The main advantage of trading using opposite Select Medical and Mednax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Select Medical 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.| Select Medical vs. The Ensign Group | Select Medical vs. Encompass Health Corp | Select Medical vs. InnovAge Holding Corp | Select Medical vs. Enhabit |
| 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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