Correlation Between InnovAge Holding and Mednax

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

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

Diversification Opportunities for InnovAge Holding and Mednax

-0.49

Correlation Coefficient

InnovAge Holding  Mednax

Very good diversification

The 3 months correlation between InnovAge and Mednax is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding InnovAge Holding Corp and Mednax Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mednax Inc and InnovAge Holding 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 InnovAge Holding Corp are associated (or correlated) with Mednax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mednax Inc has no effect on the direction of InnovAge Holding i.e., InnovAge Holding and Mednax go up and down completely randomly.

Pair Corralation between InnovAge Holding and Mednax

Given the investment horizon of 90 days InnovAge Holding is expected to generate 10.31 times less return on investment than Mednax. In addition to that, InnovAge Holding is 1.27 times more volatile than Mednax Inc. It trades about 0.01 of its total potential returns per unit of risk. Mednax Inc is currently generating about 0.08 per unit of volatility. If you would invest  934.00  in Mednax Inc on September 2, 2024 and sell it today you would earn a total of  562.00  from holding Mednax Inc or generate 60.17% return on investment over 90 days.

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

InnovAge Holding Corp  vs.  Mednax Inc

InnovAge Holding Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days InnovAge Holding Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Mednax Inc

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mednax Inc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Mednax exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with InnovAge Holding and Mednax

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

The idea behind InnovAge Holding Corp and Mednax Inc 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.