Correlation Between Amedisys and Medical Facilities
Can any of the company-specific risk be diversified away by investing in both Amedisys 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 Amedisys and Medical Facilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amedisys and Medical Facilities, you can compare the effects of market volatilities on Amedisys 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 Amedisys with a short position of Medical Facilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amedisys and Medical Facilities.
Diversification Opportunities for Amedisys and Medical Facilities
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Amedisys and Medical is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Amedisys and Medical Facilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medical Facilities and Amedisys 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 Amedisys 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 Amedisys i.e., Amedisys and Medical Facilities go up and down completely randomly.
Pair Corralation between Amedisys and Medical Facilities
Given the investment horizon of 90 days Amedisys is expected to under-perform the Medical Facilities. But the stock apears to be less risky and, when comparing its historical volatility, Amedisys is 2.15 times less risky than Medical Facilities. The stock trades about -0.01 of its potential returns per unit of risk. The Medical Facilities is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 642.00 in Medical Facilities on October 1, 2024 and sell it today you would earn a total of 433.00 from holding Medical Facilities or generate 67.45% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 91.7% |
Values | Daily Returns |
Amedisys vs. Medical Facilities
Performance |
Timeline |
Amedisys |
Medical Facilities |
Amedisys and Medical Facilities Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Amedisys and Medical Facilities
The main advantage of trading using opposite Amedisys and Medical Facilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amedisys 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.Amedisys vs. Acadia Healthcare | Amedisys vs. Addus HomeCare | Amedisys vs. Encompass Health Corp | Amedisys vs. The Ensign Group |
Medical Facilities vs. Mesabi Trust | Medical Facilities vs. Nutanix | Medical Facilities vs. Ggtoor Inc | Medical Facilities vs. Aquagold International |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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