Correlation Between Mednax and InMode

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

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

Diversification Opportunities for Mednax and InMode

0.7

Correlation Coefficient

Mednax  InMode

Poor diversification

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

Pair Corralation between Mednax and InMode

Allowing for the 90-day total investment horizon Mednax Inc is expected to generate 1.72 times more return on investment than InMode. However, Mednax is 1.72 times more volatile than InMode. It trades about 0.01 of its potential returns per unit of risk. InMode is currently generating about -0.02 per unit of risk. If you would invest  1,501  in Mednax Inc on December 2, 2024 and sell it today you would lose (24.00) from holding Mednax Inc or give up 1.6% of portfolio value over 90 days.

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

Mednax Inc  vs.  InMode

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.

InMode

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Mednax and InMode

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

The idea behind Mednax Inc and InMode 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.