Correlation Between CVS Health and Mednax
Can any of the company-specific risk be diversified away by investing in both CVS Health 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 CVS Health and Mednax into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVS Health Corp and Mednax Inc, you can compare the effects of market volatilities on CVS Health 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 CVS Health with a short position of Mednax. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and Mednax.
Diversification Opportunities for CVS Health and Mednax
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between CVS and Mednax is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health Corp and Mednax Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mednax Inc and CVS Health 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 CVS Health Corp 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 CVS Health i.e., CVS Health and Mednax go up and down completely randomly.
Pair Corralation between CVS Health and Mednax
Considering the 90-day investment horizon CVS Health Corp is expected to under-perform the Mednax. But the stock apears to be less risky and, when comparing its historical volatility, CVS Health Corp is 1.08 times less risky than Mednax. The stock trades about -0.36 of its potential returns per unit of risk. The Mednax Inc is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 959.00 in Mednax Inc on January 26, 2024 and sell it today you would lose (35.00) from holding Mednax Inc or give up 3.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CVS Health Corp vs. Mednax Inc
Performance |
| Timeline |
| CVS Health Corp |
| Mednax Inc |
CVS Health and Mednax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVS Health and Mednax
The main advantage of trading using opposite CVS Health and Mednax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS Health 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.| CVS Health vs. Humana Inc | CVS Health vs. Cigna Corp | CVS Health vs. Elevance Health | CVS Health vs. Centene Corp |
| Mednax vs. Acadia Healthcare | Mednax vs. Select Medical Holdings | Mednax vs. Universal Health Services | Mednax vs. Prestige Brand Holdings |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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