Correlation Between Surgery Partners and Mednax

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

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

Diversification Opportunities for Surgery Partners and Mednax

0.53

Correlation Coefficient

Surgery Partners  Mednax

Very weak diversification

The 3 months correlation between Surgery and Mednax is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Surgery Partners and Mednax Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mednax Inc and Surgery Partners 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 Surgery Partners are associated (or correlated) with Mednax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mednax Inc has no effect on the direction of Surgery Partners i.e., Surgery Partners and Mednax go up and down completely randomly.

Pair Corralation between Surgery Partners and Mednax

Given the investment horizon of 90 days Surgery Partners is expected to generate 0.86 times more return on investment than Mednax. However, Surgery Partners is 1.16 times less risky than Mednax. It trades about 0.1 of its potential returns per unit of risk. Mednax Inc is currently generating about 0.08 per unit of risk. If you would invest  2,057  in Surgery Partners on December 28, 2024 and sell it today you would earn a total of  355.00  from holding Surgery Partners or generate 17.26% return on investment over 90 days.

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

Surgery Partners  vs.  Mednax Inc

Surgery Partners

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Surgery Partners are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Surgery Partners showed solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Surgery Partners and Mednax

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

The idea behind Surgery Partners and Mednax Inc 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.