Correlation Between Mednax and Globus Medical

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

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

Diversification Opportunities for Mednax and Globus Medical

0.88

Correlation Coefficient

Mednax  Globus Medical

Very poor diversification

The 3 months correlation between Mednax and Globus is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Mednax Inc and Globus Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globus Medical 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 Globus Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globus Medical has no effect on the direction of Mednax i.e., Mednax and Globus Medical go up and down completely randomly.

Pair Corralation between Mednax and Globus Medical

Allowing for the 90-day total investment horizon Mednax Inc is expected to under-perform the Globus Medical. But the stock apears to be less risky and, when comparing its historical volatility, Mednax Inc is 1.13 times less risky than Globus Medical. The stock trades about -0.04 of its potential returns per unit of risk. The Globus Medical is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  7,472  in Globus Medical on September 5, 2024 and sell it today you would earn a total of  1,038  from holding Globus Medical or generate 13.89% return on investment over 90 days.

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

Mednax Inc  vs.  Globus Medical

Mednax Inc

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mednax Inc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Mednax exhibited solid returns over the last few months and may actually be approaching a breakup point.

Globus Medical

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Globus Medical are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Globus Medical exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mednax and Globus Medical

The main advantage of trading using opposite Mednax and Globus Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mednax position performs unexpectedly, Globus Medical 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 Globus Medical will offset losses from the drop in Globus Medical's long position.

The idea behind Mednax Inc and Globus Medical 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.