Correlation Between Mednax and Amedisys

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

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

Diversification Opportunities for Mednax and Amedisys

-0.7

Correlation Coefficient

Mednax  Amedisys

Excellent diversification

The 3 months correlation between Mednax and Amedisys is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Mednax Inc and Amedisys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amedisys 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 Amedisys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amedisys has no effect on the direction of Mednax i.e., Mednax and Amedisys go up and down completely randomly.

Pair Corralation between Mednax and Amedisys

Allowing for the 90-day total investment horizon Mednax Inc is expected to generate 4.79 times more return on investment than Amedisys. However, Mednax is 4.79 times more volatile than Amedisys. It trades about 0.15 of its potential returns per unit of risk. Amedisys is currently generating about -0.15 per unit of risk. If you would invest  1,086  in Mednax Inc on August 30, 2024 and sell it today you would earn a total of  391.00  from holding Mednax Inc or generate 36.0% return on investment over 90 days.

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

Mednax Inc  vs.  Amedisys

Mednax Inc

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mednax Inc are ranked lower than 11 (%) 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.

Amedisys

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amedisys has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Mednax and Amedisys

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

The idea behind Mednax Inc and Amedisys 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.