Correlation Between Ensign and Mednax
Can any of the company-specific risk be diversified away by investing in both Ensign 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 Ensign and Mednax into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Ensign Group and Mednax Inc, you can compare the effects of market volatilities on Ensign 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 Ensign with a short position of Mednax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ensign and Mednax.
Diversification Opportunities for Ensign and Mednax
Very good diversification
The 3 months correlation between Ensign and Mednax is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding The Ensign Group and Mednax Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mednax Inc and Ensign 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 The Ensign Group 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 Ensign i.e., Ensign and Mednax go up and down completely randomly.
Pair Corralation between Ensign and Mednax
Given the investment horizon of 90 days The Ensign Group is expected to generate 0.58 times more return on investment than Mednax. However, The Ensign Group is 1.73 times less risky than Mednax. It trades about 0.0 of its potential returns per unit of risk. Mednax Inc is currently generating about -0.04 per unit of risk. If you would invest 11,741 in The Ensign Group on January 20, 2024 and sell it today you would lose (93.00) from holding The Ensign Group or give up 0.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.41% |
| Values | Daily Returns |
The Ensign Group vs. Mednax Inc
Performance |
| Timeline |
| Ensign Group |
| Mednax Inc |
Ensign and Mednax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ensign and Mednax
The main advantage of trading using opposite Ensign and Mednax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ensign 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 The Ensign Group 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.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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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