Correlation Between Mednax and Enhabit

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

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

Diversification Opportunities for Mednax and Enhabit

0.46

Correlation Coefficient

Mednax  Enhabit

Very weak diversification

The 3 months correlation between Mednax and Enhabit is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Mednax Inc and Enhabit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enhabit 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 Enhabit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enhabit has no effect on the direction of Mednax i.e., Mednax and Enhabit go up and down completely randomly.

Pair Corralation between Mednax and Enhabit

Allowing for the 90-day total investment horizon Mednax Inc is expected to generate 1.65 times more return on investment than Enhabit. However, Mednax is 1.65 times more volatile than Enhabit. It trades about 0.08 of its potential returns per unit of risk. Enhabit is currently generating about 0.11 per unit of risk. If you would invest  1,321  in Mednax Inc on December 28, 2024 and sell it today you would earn a total of  181.00  from holding Mednax Inc or generate 13.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Mednax Inc  vs.  Enhabit

Mednax Inc

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mednax Inc are ranked lower than 5 (%) 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.

Enhabit

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Enhabit are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, Enhabit sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mednax and Enhabit

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

The idea behind Mednax Inc and Enhabit 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.