Correlation Between Surgery Partners and Option Care

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

By analyzing existing cross correlation between Surgery Partners and Option Care Health, you can compare the effects of market volatilities on Surgery Partners and Option Care 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 Option Care. Check out your portfolio center. Please also check ongoing floating volatility patterns of Surgery Partners and Option Care.

Diversification Opportunities for Surgery Partners and Option Care

0.69

Correlation Coefficient

Surgery Partners  Option Care

Poor diversification

The 3 months correlation between Surgery and Option is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Surgery Partners and Option Care Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Option Care Health 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 Option Care. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Option Care Health has no effect on the direction of Surgery Partners i.e., Surgery Partners and Option Care go up and down completely randomly.

Pair Corralation between Surgery Partners and Option Care

Given the investment horizon of 90 days Surgery Partners is expected to generate 2.55 times less return on investment than Option Care. In addition to that, Surgery Partners is 1.33 times more volatile than Option Care Health. It trades about 0.09 of its total potential returns per unit of risk. Option Care Health is currently generating about 0.32 per unit of volatility. If you would invest  2,266  in Option Care Health on December 29, 2024 and sell it today you would earn a total of  1,254  from holding Option Care Health or generate 55.34% return on investment over 90 days.

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

Surgery Partners  vs.  Option Care Health

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.

Option Care Health

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Option Care Health are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain fundamental indicators, Option Care demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Surgery Partners and Option Care

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

The idea behind Surgery Partners and Option Care Health 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.