Pediatrix’s High‑Vol Rally Hides Six Risk Flags and a History of Deep Drawdowns

Why the stock’s upside may be outweighed by asymmetric downside exposure

MD Pediatrix Medical Group, Inc.

In this report

01

Returns Overview

Period returns, alpha, cumulative performance, distributions

P. 2-3

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02

Volatility Analysis

Annualized volatility, downside deviation, drawdowns

P. 4-5

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03

Beta & Correlation

Trailing, upside, downside beta, systematic risk

P. 6-7

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04

Risk-Adjusted Returns

Sharpe, Sortino, Calmar, Information, Treynor

P. 8-9

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05

Market Regime Analysis

Bull/bear behavior, capture ratios

P. 10-11

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06

Investment Highlights & Risk Summary

Executive summary, risk flags, rankings

P. 12-13

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Returns Overview

Pediatrix Medical Group, Inc. (MD) — Return Performance

Pediatrix Medical Group, Inc. (MD) delivered a strong 1‑year total return of 57.56%, outpacing its healthcare sector benchmark by 38.56% and generating an absolute alpha of 2.6% versus the sector ETF. The longer horizon shows mixed performance: a robust 199.47% gain over 2 years (alpha 164.25%) but a sharp reversal in the 5‑year window, where the stock fell 25.01%, lagging the sector by 96.82%. Short‑term periods (1M–6M) produced modest positive returns (4.97% to 5.7%) with limited alpha, indicating recent price action has been largely aligned with sector movements.

Period Returns vs S&P 500 & XLV

Monthly Returns Heatmap

MD

The stock generated meaningful positive alpha over the 1‑year and 2‑year horizons, reflecting superior earnings or operational drivers relative to peers. However, the negative 5‑year return and substantial sector underperformance (-96.82% alpha) reveal a longer‑term downside trend that investors must weigh against recent gains.

Returns Overview

Pediatrix Medical Group, Inc. (MD) — Return Charts

Volatility Analysis

Pediatrix Medical Group, Inc. (MD) — Volatility Profile

Pediatrix Medical Group exhibits markedly higher price variability than the broader market, with an annualized volatility of 43.72% compared to the S&P 500’s 17.78%, indicating more than double the fluctuation in daily returns. The firm’s downside risk is pronounced: a downside deviation of 33.27% and a historic maximum drawdown of -92.08% over a nine‑year period underscore deep, prolonged equity erosion without any recovery to prior peaks. Recent short‑term volatility remains elevated; the 60‑day vol of 35.74% exceeds its 252‑day average of 43.39%, suggesting that while still high, near‑term price swings have modestly softened relative to the longer‑term baseline.

Volatility Metrics

MD

The company’s volatility stands at 2.46 times the S&P 500 benchmark, reflecting a risk profile suited primarily for investors comfortable with high‑beta exposures. Downside deviation of 33.27% signals that negative returns are substantially larger than the average upside moves, and the -92.08% max drawdown—spanning from August 2015 to June 2024 without any meaningful recovery—highlights extreme tail risk and a protracted period of capital loss. Although the current 60‑day volatility (35.74%) is slightly below the 252‑day figure (43.39%), it remains well above market norms, indicating that price swings are still intense in the short run.

Annualized volatility of 43.72% is 2.46× higher than the S&P 500’s 17.78%.
Downside deviation of 33.27% reveals a heavy skew toward negative returns.
Maximum drawdown of -92.08% persisted for nearly nine years with no recovery.
60‑day volatility (35.74%) is lower than the 252‑day average (43.39%), but both are far above market levels.

Positive Characteristics
Short‑term volatility has modestly retreated from its longer‑term peak, indicating a slight easing of price turbulence.
The company’s elevated beta may offer higher upside potential in bullish regimes for risk‑tolerant investors.

Volatility Analysis

Pediatrix Medical Group, Inc. (MD) — Volatility & Drawdown Charts

Beta & Correlation

Pediatrix Medical Group, Inc. (MD) — Beta Profile

Pediatrix Medical Group, Inc. (MD) exhibits a trailing beta of 0.917 against the S&P 500, placing it squarely within the market‑like range of 0.8–1.2. This suggests that, on average, the stock moves in close step with broad equity markets, neither markedly defensive nor aggressively volatile. However, the asymmetric upside and downside betas—0.743 versus 1.012—reveal a pronounced tilt toward larger losses during market downturns, a pattern that risk‑aware investors should weigh when constructing portfolios. The stock’s R‑squared of 13.9% indicates that only a modest fraction of its price variation is explained by overall market movements; the remaining 86.1% is idiosyncratic, implying strong diversification benefits relative to a pure market exposure. When benchmarked against the healthcare sector (XLV), MD’s sector beta of 0.852 and sector correlation of 0.326 show that sector dynamics account for even less of its risk profile than the broader market, underscoring that company‑specific drivers dominate its return behavior.

Beta & Correlation Metrics

MD

The trailing beta of 0.917 signals that MD tracks the S&P 500 closely, but the downside beta of 1.012 exceeds the market benchmark, indicating heightened sensitivity to negative market shocks. Conversely, an upside beta of 0.743 suggests muted participation in rallying markets, which may dampen upside capture during bullish cycles. The low sector correlation (0.326) and sector beta (0.852) further highlight that MD’s performance is less tied to healthcare industry swings than to broader equity trends.

Trailing beta of 0.917 places MD in a market‑like risk band, not defensive nor aggressive.
Downside beta (1.012) exceeds upside beta (0.743), indicating asymmetrical risk with greater loss potential on market declines.
R-squared of 13.9% shows that only ~14% of price movement is driven by the S&P 500; 86% is idiosyncratic.
Sector beta (0.852) is slightly lower than market beta, suggesting sector exposure contributes less to total risk than overall market movements.
Low sector R² (10.7%) reinforces that healthcare‑specific factors explain a small share of the stock’s variance.

Positive Characteristics
Market‑like beta provides predictable behavior relative to broad indices, aiding portfolio construction.
High idiosyncratic component (86.1%) offers diversification benefits for investors seeking non‑correlated exposure.
Downside beta only modestly above 1, indicating that while risk is asymmetric, it remains within a manageable range compared to highly leveraged stocks.

Beta & Correlation

Pediatrix Medical Group, Inc. (MD) — Rolling Beta

Positive Notes

Market‑like beta provides predictable behavior relative to broad indices, aiding portfolio construction.

High idiosyncratic component (86.1%) offers diversification benefits for investors seeking non‑correlated exposure.

Downside beta only modestly above 1, indicating that while risk is asymmetric, it remains within a manageable range compared to highly leveraged stocks.

Risk-Adjusted Returns

Pediatrix Medical Group, Inc. (MD) — Risk-Adjusted Performance

Pediatrix Medical Group, Inc. (MD) exhibits risk-adjusted performance that falls below standard benchmarks across all measured metrics. The Sharpe ratio of -0.08 indicates the stock underperformed the 3.63% risk‑free rate on a volatility‑adjusted basis, while the negative Sortino ratio (-0.105) confirms that downside volatility further erodes returns relative to the risk‑free alternative. Both the Calmar (0.002) and Information ratios (‑0.312) suggest minimal return generation against historical drawdowns and a lack of consistent alpha, respectively, positioning the company as the lowest‑performing entity in a comparative ranking.

Risk-free rate: 3.63% (Fed Funds Rate)

Risk-Adjusted Metrics

MD

The Sharpe ratio of -0.08 signals that the total return was below the risk‑free rate after accounting for overall volatility, and the more negative Sortino ratio (-0.105) highlights an even poorer performance when isolating downside risk. The Calmar ratio of 0.002 reflects a negligible return relative to the maximum historical drawdown, implying severe loss potential during market stress. An Information Ratio of -0.312 indicates that any active management has not delivered consistent excess returns over a relevant benchmark, further underscoring the weakness in risk‑adjusted outcomes.

All risk‑adjusted metrics are negative or near zero, indicating underperformance versus the risk‑free rate.
Downside risk (Sortino) is worse than overall volatility risk (Sharpe), suggesting heightened sensitivity to losses.
The Calmar ratio of 0.002 reveals that returns barely offset the worst drawdown experienced.
A negative Information Ratio shows a lack of consistent alpha generation.

Positive Characteristics
None identified; metrics uniformly indicate adverse risk‑adjusted performance.

Risk-Adjusted Returns

Pediatrix Medical Group, Inc. (MD) — Rolling Sharpe & Sortino

Positive Notes

None identified; metrics uniformly indicate adverse risk‑adjusted performance.

Market Regime Analysis

Pediatrix Medical Group, Inc. (MD) — Regime Behavior

Pediatrix Medical Group exhibits pronounced sensitivity to market volatility regimes. In a Bull-LowVol environment the stock delivers modest gains of 0.14% monthly, reflecting limited upside when markets are calm and rising. Conversely, during Bull-HighVol periods it generates an average return of 3.15% per month, indicating that heightened market turbulence amplifies its performance. The downside is stark: in Bear-LowVol conditions the stock loses 4.58% monthly, and even in Bear-HighVol regimes the decline eases slightly to -3.56%, underscoring vulnerability during market downturns regardless of volatility level. Its upside capture of 95.5% suggests it tracks most of the market’s gains, while a downside capture of 178.3% reveals that losses exceed the market by a wide margin, yielding a capture ratio of 0.54—a clear sign of asymmetrical risk.

Current Market Regime: Bull-HighVol

Bull-LowVol = calm uptrend • Bull-HighVol = volatile uptrend • Bear-LowVol = orderly decline • Bear-HighVol = crisis

Regime Returns & Capture Ratios

MD

The stock’s performance is markedly regime‑dependent. In bullish markets with high volatility, Pediatrix thrives, delivering returns more than twenty times its calm‑bull average, which may reflect increased demand for healthcare services amid economic expansion and heightened spending cycles. However, in bearish settings the company underperforms, suffering losses that are substantially larger than the market’s decline, indicating limited defensive qualities. The downside capture of 178.3% confirms that during market stress the stock amplifies negative moves, making it a non‑defensive name. Given the current Bull-HighVol regime, the environment is favorable for Pediatrix, aligning with its strongest historical return profile.

Market Regime Analysis

Pediatrix Medical Group, Inc. (MD) — Regime & Capture Charts

Regime Timeline

Pediatrix’s monthly return jumps from 0.14% in calm bull markets to 3.15% when volatility spikes, highlighting a strong positive correlation with market turbulence.
Downside capture of 178.3% means the stock loses nearly twice as much as the S&P 500 during declines, indicating high downside risk.
The capture ratio of 0.54 is well below the ideal benchmark of >1.0, reflecting an unfavorable asymmetry between upside and downside performance.
In bear regimes—both low and high volatility—the stock posts negative returns (-4.58% and -3.56% respectively), confirming a lack of defensive resilience.

Positive Characteristics
Exceptional performance in Bull-HighVol periods, delivering an average monthly gain of over 3%, which can be a source of upside in volatile uptrends.
Upside capture close to parity with the market (95.5%) indicates that the stock participates fully in bullish moves when volatility is elevated.

Investment Highlights & Risk Summary

Pediatrix Medical Group, Inc. (MD) — Summary & Implications

Pediatrix Medical Group delivered an exceptional 57.6% total return over the past year, generating an alpha of 38.6% versus the S&P 500 and outpacing its healthcare sector peers by 43.0% alpha. However, the stock’s risk profile is markedly adverse: a Sharpe of -0.08 indicates returns below the risk‑free rate on a risk‑adjusted basis, while annualized volatility sits at 43.7%, well above the market average of roughly 17%. The downside capture of 178% and a maximum drawdown of -92.1% reveal that the upside performance has been heavily offset by extreme losses during market declines. Investors must weigh the strong absolute return against these pronounced risk flags, particularly if they have limited capacity to absorb large short‑term capital erosion.

Summary Dashboard

Investment Highlights

One‑year total return of 57.6% represents a substantial gain relative to the S&P 500’s ~19% annual performance.
Alpha of 38.6% versus the S&P 500 and sector alpha of 43.0% demonstrate that the stock has generated significant excess returns over both benchmarks.
Upside capture of 95.5% shows that the company participates in most market rallies, albeit slightly lagging the broader market.
Beta of 0.917 indicates overall market sensitivity close to neutral, suggesting the stock moves roughly in line with the S&P 500 on a net basis.

Risk-Return Rankings

MD HIGH

Pediatrix offers high absolute returns but carries extreme downside risk and negative risk‑adjusted performance.

Strength: Exceptional 57.6% one‑year return with strong alpha versus both market and sector benchmarks.

Concern: Maximum drawdown of -92.1% and Sharpe of -0.08 signal severe capital loss potential and poor risk‑adjusted returns.

Key Takeaways

The stock’s spectacular 57.6% return is driven by a large positive alpha, not by market beta.
Negative Sharpe and Sortino ratios indicate that the excess return does not compensate for the level of volatility endured.
Downside capture far exceeds upside capture (178% vs 95.5%), meaning the stock amplifies market declines.
A maximum historical drawdown of -92.1% underscores the potential for near‑total loss during adverse regimes.

PORTFOLIO IMPLICATIONS

Given its high volatility and asymmetric downside risk, Pediatrix may suit only a small allocation within a diversified portfolio that can tolerate large drawdowns, such as an aggressive growth or tactical satellite position. The stock’s strong absolute return could complement lower‑beta, defensive holdings by providing upside potential during market rallies, but investors should hedge or limit exposure to mitigate the pronounced downside capture and deep drawdown risk.

MD

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Report written 2026-06-07 • Finexus

Disclaimer

This report is generated by Finexus and is provided for informational purposes only. It does not constitute investment advice, a recommendation, or an offer or solicitation to buy or sell any security.

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