Correlation Between Amedisys and Mednax

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

By analyzing existing cross correlation between Amedisys and Mednax Inc, you can compare the effects of market volatilities on Amedisys 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 Amedisys with a short position of Mednax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amedisys and Mednax.

Diversification Opportunities for Amedisys and Mednax

-0.76

Correlation Coefficient

Amedisys  Mednax

Pay attention - limited upside

The 3 months correlation between Amedisys and Mednax is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Amedisys and Mednax Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mednax Inc and Amedisys 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 Amedisys 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 Amedisys i.e., Amedisys and Mednax go up and down completely randomly.

Pair Corralation between Amedisys and Mednax

Given the investment horizon of 90 days Amedisys is expected to generate 0.21 times more return on investment than Mednax. However, Amedisys is 4.65 times less risky than Mednax. It trades about 0.09 of its potential returns per unit of risk. Mednax Inc is currently generating about -0.14 per unit of risk. If you would invest  9,302  in Amedisys on February 29, 2024 and sell it today you would earn a total of  258.00  from holding Amedisys or generate 2.77% return on investment over 90 days.

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

Amedisys  vs.  Mednax Inc

Amedisys

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Amedisys are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Amedisys is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Mednax Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mednax Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in June 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Amedisys and Mednax

The main advantage of trading using opposite Amedisys and Mednax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amedisys 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 Amedisys 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.