Correlation Between CareMax and National Research

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

By analyzing existing cross correlation between CareMax and National Research Corp, you can compare the effects of market volatilities on CareMax and National Research 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 CareMax with a short position of National Research. Check out your portfolio center. Please also check ongoing floating volatility patterns of CareMax and National Research.

Diversification Opportunities for CareMax and National Research

0.45

Correlation Coefficient

CareMax  National Research

Very weak diversification

The 3 months correlation between CareMax and National is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding CareMax and National Research Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Research Corp and CareMax 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 CareMax are associated (or correlated) with National Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Research Corp has no effect on the direction of CareMax i.e., CareMax and National Research go up and down completely randomly.

Pair Corralation between CareMax and National Research

Given the investment horizon of 90 days CareMax is expected to generate 10.93 times more return on investment than National Research. However, CareMax is 10.93 times more volatile than National Research Corp. It trades about 0.0 of its potential returns per unit of risk. National Research Corp is currently generating about -0.11 per unit of risk. If you would invest  1.30  in CareMax on December 29, 2024 and sell it today you would lose (1.29) from holding CareMax or give up 99.23% of portfolio value over 90 days.

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

CareMax  vs.  National Research Corp

CareMax

Risk-Adjusted Performance

Very Weak

Over the last 90 days CareMax has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, CareMax is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

National Research Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days National Research Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with CareMax and National Research

The main advantage of trading using opposite CareMax and National Research positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CareMax position performs unexpectedly, National Research 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 National Research will offset losses from the drop in National Research's long position.

The idea behind CareMax and National Research Corp 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.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..