Correlation Between Mednax and Laboratory

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

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

Diversification Opportunities for Mednax and Laboratory

0.55

Correlation Coefficient

Mednax  Laboratory

Very weak diversification

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

Pair Corralation between Mednax and Laboratory

Allowing for the 90-day total investment horizon Mednax Inc is expected to generate 3.39 times more return on investment than Laboratory. However, Mednax is 3.39 times more volatile than Laboratory of. It trades about 0.07 of its potential returns per unit of risk. Laboratory of is currently generating about 0.02 per unit of risk. If you would invest  1,321  in Mednax Inc on December 29, 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	100.0%
Values	Daily Returns

Mednax Inc  vs.  Laboratory of

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.

Laboratory

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Laboratory of are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical indicators, Laboratory is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Mednax and Laboratory

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

The idea behind Mednax Inc and Laboratory of 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.