Correlation Between Mednax and AMN Healthcare

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

Diversification Opportunities for Mednax and AMN Healthcare

0.56
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Mednax and AMN is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Mednax Inc and AMN Healthcare Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMN Healthcare Services 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 AMN Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMN Healthcare Services has no effect on the direction of Mednax i.e., Mednax and AMN Healthcare go up and down completely randomly.

Pair Corralation between Mednax and AMN Healthcare

Allowing for the 90-day total investment horizon Mednax is expected to generate 1.11 times less return on investment than AMN Healthcare. But when comparing it to its historical volatility, Mednax Inc is 1.18 times less risky than AMN Healthcare. It trades about 0.22 of its potential returns per unit of risk. AMN Healthcare Services is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  5,489  in AMN Healthcare Services on December 29, 2023 and sell it today you would earn a total of  659.00  from holding AMN Healthcare Services or generate 12.01% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Mednax Inc  vs.  AMN Healthcare Services

 Performance 
       Timeline  
Mednax Inc 

Risk-Adjusted Performance

4 of 100

 
Low
 
High
Insignificant
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 abnormal fundamental indicators, Mednax may actually be approaching a critical reversion point that can send shares even higher in April 2024.
AMN Healthcare Services 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days AMN Healthcare Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in April 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Mednax and AMN Healthcare Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Mednax and AMN Healthcare

The main advantage of trading using opposite Mednax and AMN Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mednax position performs unexpectedly, AMN Healthcare 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 AMN Healthcare will offset losses from the drop in AMN Healthcare's long position.
The idea behind Mednax Inc and AMN Healthcare Services 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.

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