Correlation Between Mednax and Community Health

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

Diversification Opportunities for Mednax and Community Health

0.39
  Correlation Coefficient

Weak diversification

The 3 months correlation between Mednax and Community is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Mednax Inc and Community Health Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Community Health Systems 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 Community Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Community Health Systems has no effect on the direction of Mednax i.e., Mednax and Community Health go up and down completely randomly.

Pair Corralation between Mednax and Community Health

Allowing for the 90-day total investment horizon Mednax is expected to generate 2.27 times less return on investment than Community Health. But when comparing it to its historical volatility, Mednax Inc is 1.79 times less risky than Community Health. It trades about 0.23 of its potential returns per unit of risk. Community Health Systems is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  276.00  in Community Health Systems on December 29, 2023 and sell it today you would earn a total of  74.00  from holding Community Health Systems or generate 26.81% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Mednax Inc  vs.  Community Health Systems

 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.
Community Health Systems 

Risk-Adjusted Performance

4 of 100

 
Low
 
High
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Community Health Systems are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Community Health demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Mednax and Community Health Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Mednax and Community Health

The main advantage of trading using opposite Mednax and Community Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mednax position performs unexpectedly, Community Health 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 Community Health will offset losses from the drop in Community Health's long position.
The idea behind Mednax Inc and Community Health Systems 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.

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