Correlation Between Simulations Plus and CareMax
Can any of the company-specific risk be diversified away by investing in both Simulations Plus and CareMax 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 Simulations Plus and CareMax into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Simulations Plus and CareMax, you can compare the effects of market volatilities on Simulations Plus and CareMax 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 Simulations Plus with a short position of CareMax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simulations Plus and CareMax.
Diversification Opportunities for Simulations Plus and CareMax
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Simulations and CareMax is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Simulations Plus and CareMax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CareMax and Simulations Plus 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 Simulations Plus are associated (or correlated) with CareMax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CareMax has no effect on the direction of Simulations Plus i.e., Simulations Plus and CareMax go up and down completely randomly.
Pair Corralation between Simulations Plus and CareMax
Considering the 90-day investment horizon Simulations Plus is expected to generate 7.57 times less return on investment than CareMax. But when comparing it to its historical volatility, Simulations Plus is 8.76 times less risky than CareMax. It trades about 0.21 of its potential returns per unit of risk. CareMax is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 0.88 in CareMax on September 3, 2024 and sell it today you would earn a total of 0.08 from holding CareMax or generate 9.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 75.0% |
| Values | Daily Returns |
Simulations Plus vs. CareMax
Performance |
| Timeline |
| Simulations Plus |
| CareMax |
Simulations Plus and CareMax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Simulations Plus and CareMax
The main advantage of trading using opposite Simulations Plus and CareMax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simulations Plus position performs unexpectedly, CareMax 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 CareMax will offset losses from the drop in CareMax's long position.| Simulations Plus vs. Definitive Healthcare Corp | Simulations Plus vs. National Research Corp | Simulations Plus vs. Evolent Health | Simulations Plus vs. Privia Health Group |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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