Correlation Between Select Medical and Medical Facilities
Can any of the company-specific risk be diversified away by investing in both Select Medical and Medical Facilities 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 Medical Facilities 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 Medical Facilities, you can compare the effects of market volatilities on Select Medical and Medical Facilities 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 Medical Facilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Select Medical and Medical Facilities.
Diversification Opportunities for Select Medical and Medical Facilities
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Select and Medical is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Select Medical Holdings and Medical Facilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medical Facilities 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 Medical Facilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medical Facilities has no effect on the direction of Select Medical i.e., Select Medical and Medical Facilities go up and down completely randomly.
Pair Corralation between Select Medical and Medical Facilities
Considering the 90-day investment horizon Select Medical is expected to generate 1.49 times less return on investment than Medical Facilities. But when comparing it to its historical volatility, Select Medical Holdings is 1.19 times less risky than Medical Facilities. It trades about 0.06 of its potential returns per unit of risk. Medical Facilities is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 543.00 in Medical Facilities on September 3, 2024 and sell it today you would earn a total of 571.00 from holding Medical Facilities or generate 105.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 92.53% |
| Values | Daily Returns |
Select Medical Holdings vs. Medical Facilities
Performance |
| Timeline |
| Select Medical Holdings |
| Medical Facilities |
Select Medical and Medical Facilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Select Medical and Medical Facilities
The main advantage of trading using opposite Select Medical and Medical Facilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Select Medical position performs unexpectedly, Medical Facilities 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 Medical Facilities will offset losses from the drop in Medical Facilities' long position.| Select Medical vs. The Ensign Group | Select Medical vs. Encompass Health Corp | Select Medical vs. InnovAge Holding Corp | Select Medical vs. Enhabit |
| Medical Facilities vs. Pmv Pharmaceuticals | Medical Facilities vs. MediciNova | Medical Facilities vs. Pharvaris BV | Medical Facilities vs. PepGen |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Transaction History View history of all your transactions and understand their impact on performance |