Correlation Between Mednax and Surgery Partners

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

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

Diversification Opportunities for Mednax and Surgery Partners

-0.61

Correlation Coefficient

Mednax  Surgery Partners

Excellent diversification

The 3 months correlation between Mednax and Surgery is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Mednax Inc and Surgery Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Surgery Partners 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 Surgery Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Surgery Partners has no effect on the direction of Mednax i.e., Mednax and Surgery Partners go up and down completely randomly.

Pair Corralation between Mednax and Surgery Partners

Allowing for the 90-day total investment horizon Mednax Inc is expected to generate 1.21 times more return on investment than Surgery Partners. However, Mednax is 1.21 times more volatile than Surgery Partners. It trades about 0.16 of its potential returns per unit of risk. Surgery Partners is currently generating about -0.14 per unit of risk. If you would invest  1,066  in Mednax Inc on August 31, 2024 and sell it today you would earn a total of  418.50  from holding Mednax Inc or generate 39.26% return on investment over 90 days.

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

Mednax Inc  vs.  Surgery Partners

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 unsteady fundamental indicators, Mednax exhibited solid returns over the last few months and may actually be approaching a breakup point.

Surgery Partners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Surgery Partners has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Mednax and Surgery Partners

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

The idea behind Mednax Inc and Surgery Partners 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.