Correlation Between Mednax and Adapthealth Corp

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

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

Diversification Opportunities for Mednax and Adapthealth Corp

-0.71

Correlation Coefficient

Mednax  Adapthealth Corp

Pay attention - limited upside

The 3 months correlation between Mednax and Adapthealth is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Mednax Inc and Adapthealth Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adapthealth Corp and Mednax 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 Mednax Inc are associated (or correlated) with Adapthealth Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adapthealth Corp has no effect on the direction of Mednax i.e., Mednax and Adapthealth Corp go up and down completely randomly.

Pair Corralation between Mednax and Adapthealth Corp

Allowing for the 90-day total investment horizon Mednax Inc is expected to generate 0.68 times more return on investment than Adapthealth Corp. However, Mednax Inc is 1.46 times less risky than Adapthealth Corp. It trades about 0.01 of its potential returns per unit of risk. Adapthealth Corp is currently generating about -0.02 per unit of risk. If you would invest  1,513  in Mednax Inc on September 5, 2024 and sell it today you would lose (31.00) from holding Mednax Inc or give up 2.05% of portfolio value over 90 days.

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

Mednax Inc  vs.  Adapthealth Corp

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 unfluctuating fundamental indicators, Mednax exhibited solid returns over the last few months and may actually be approaching a breakup point.

Adapthealth Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adapthealth 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 fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Mednax and Adapthealth Corp

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

The idea behind Mednax Inc and Adapthealth 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.