Correlation Between Mednax and Chemed Corp

Can any of the company-specific risk be diversified away by investing in both Mednax and Chemed 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 Chemed 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 Chemed Corp, you can compare the effects of market volatilities on Mednax and Chemed 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 Chemed Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mednax and Chemed Corp.

Diversification Opportunities for Mednax and Chemed Corp

0.55

Correlation Coefficient

Mednax  Chemed Corp

Very weak diversification

The 3 months correlation between Mednax and Chemed is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Mednax Inc and Chemed Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chemed 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 Chemed Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chemed Corp has no effect on the direction of Mednax i.e., Mednax and Chemed Corp go up and down completely randomly.

Pair Corralation between Mednax and Chemed Corp

Allowing for the 90-day total investment horizon Mednax Inc is expected to generate 2.3 times more return on investment than Chemed Corp. However, Mednax is 2.3 times more volatile than Chemed Corp. It trades about 0.08 of its potential returns per unit of risk. Chemed Corp is currently generating about -0.01 per unit of risk. If you would invest  881.00  in Mednax Inc on December 2, 2024 and sell it today you would earn a total of  596.00  from holding Mednax Inc or generate 67.65% return on investment over 90 days.

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

Mednax Inc  vs.  Chemed Corp

Mednax Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mednax Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Mednax is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Chemed Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Chemed Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical indicators, Chemed Corp may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Mednax and Chemed Corp

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

The idea behind Mednax Inc and Chemed 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.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.