Correlation Between CareMax and NexGel Warrant

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Can any of the company-specific risk be diversified away by investing in both CareMax and NexGel Warrant 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 NexGel Warrant into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CareMax and NexGel Warrant, you can compare the effects of market volatilities on CareMax and NexGel Warrant 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 NexGel Warrant. Check out your portfolio center. Please also check ongoing floating volatility patterns of CareMax and NexGel Warrant.

Diversification Opportunities for CareMax and NexGel Warrant

-0.54
  Correlation Coefficient

Excellent diversification

The 3 months correlation between CareMax and NexGel is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding CareMax and NexGel Warrant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NexGel Warrant 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 NexGel Warrant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NexGel Warrant has no effect on the direction of CareMax i.e., CareMax and NexGel Warrant go up and down completely randomly.

Pair Corralation between CareMax and NexGel Warrant

Given the investment horizon of 90 days CareMax is expected to generate 7.26 times more return on investment than NexGel Warrant. However, CareMax is 7.26 times more volatile than NexGel Warrant. It trades about 0.06 of its potential returns per unit of risk. NexGel Warrant is currently generating about -0.06 per unit of risk. If you would invest  2.40  in CareMax on October 22, 2024 and sell it today you would lose (2.18) from holding CareMax or give up 90.83% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy88.89%
ValuesDaily Returns

CareMax  vs.  NexGel Warrant

 Performance 
       Timeline  
CareMax 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
NexGel Warrant 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in NexGel Warrant are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting essential indicators, NexGel Warrant showed solid returns over the last few months and may actually be approaching a breakup point.

CareMax and NexGel Warrant Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with CareMax and NexGel Warrant

The main advantage of trading using opposite CareMax and NexGel Warrant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CareMax position performs unexpectedly, NexGel Warrant 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 NexGel Warrant will offset losses from the drop in NexGel Warrant's long position.
The idea behind CareMax and NexGel Warrant 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.

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