Correlation Between Brookdale Senior and Mednax

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Can any of the company-specific risk be diversified away by investing in both Brookdale Senior 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 Brookdale Senior and Mednax into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brookdale Senior Living and Mednax Inc, you can compare the effects of market volatilities on Brookdale Senior 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 Brookdale Senior with a short position of Mednax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookdale Senior and Mednax.

Diversification Opportunities for Brookdale Senior and Mednax

0.25
  Correlation Coefficient

Modest diversification

The 3 months correlation between Brookdale and Mednax is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Brookdale Senior Living and Mednax Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mednax Inc and Brookdale Senior 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 Brookdale Senior Living 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 Brookdale Senior i.e., Brookdale Senior and Mednax go up and down completely randomly.

Pair Corralation between Brookdale Senior and Mednax

Considering the 90-day investment horizon Brookdale Senior Living is expected to generate 1.24 times more return on investment than Mednax. However, Brookdale Senior is 1.24 times more volatile than Mednax Inc. It trades about 0.19 of its potential returns per unit of risk. Mednax Inc is currently generating about 0.22 per unit of risk. If you would invest  591.00  in Brookdale Senior Living on December 29, 2023 and sell it today you would earn a total of  68.00  from holding Brookdale Senior Living or generate 11.51% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Brookdale Senior Living  vs.  Mednax Inc

 Performance 
       Timeline  
Brookdale Senior Living 

Risk-Adjusted Performance

6 of 100

 
Low
 
High
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Brookdale Senior Living are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain forward-looking signals, Brookdale Senior exhibited solid returns over the last few months and may actually be approaching a breakup point.
Mednax Inc 

Risk-Adjusted Performance

4 of 100

 
Low
 
High
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Mednax Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Mednax may actually be approaching a critical reversion point that can send shares even higher in April 2024.

Brookdale Senior and Mednax Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Brookdale Senior and Mednax

The main advantage of trading using opposite Brookdale Senior and Mednax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookdale Senior 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 Brookdale Senior Living 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.

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