Correlation Between AMN Healthcare and Medical Facilities

Can any of the company-specific risk be diversified away by investing in both AMN Healthcare 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 AMN Healthcare and Medical Facilities into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AMN Healthcare Services and Medical Facilities, you can compare the effects of market volatilities on AMN Healthcare 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 AMN Healthcare with a short position of Medical Facilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMN Healthcare and Medical Facilities.

Diversification Opportunities for AMN Healthcare and Medical Facilities

0.17

Correlation Coefficient

AMN Healthcare  Medical Facilities

Average diversification

The 3 months correlation between AMN and Medical is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding AMN Healthcare Services and Medical Facilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medical Facilities and AMN Healthcare 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 AMN Healthcare Services 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 AMN Healthcare i.e., AMN Healthcare and Medical Facilities go up and down completely randomly.

Pair Corralation between AMN Healthcare and Medical Facilities

Considering the 90-day investment horizon AMN Healthcare is expected to generate 1.72 times less return on investment than Medical Facilities. In addition to that, AMN Healthcare is 1.34 times more volatile than Medical Facilities. It trades about 0.02 of its total potential returns per unit of risk. Medical Facilities is currently generating about 0.04 per unit of volatility. If you would invest  1,079  in Medical Facilities on December 28, 2024 and sell it today you would earn a total of  41.00  from holding Medical Facilities or generate 3.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

AMN Healthcare Services  vs.  Medical Facilities

AMN Healthcare Services

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AMN Healthcare Services are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, AMN Healthcare is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Medical Facilities

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Medical Facilities are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Medical Facilities is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with AMN Healthcare and Medical Facilities

The main advantage of trading using opposite AMN Healthcare and Medical Facilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMN Healthcare 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.

The idea behind AMN Healthcare Services and Medical Facilities pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .