Correlation Between ADDUS HOMECARE and AIR PRODCHEMICALS
Can any of the company-specific risk be diversified away by investing in both ADDUS HOMECARE and AIR PRODCHEMICALS 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 ADDUS HOMECARE and AIR PRODCHEMICALS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ADDUS HOMECARE and AIR PRODCHEMICALS, you can compare the effects of market volatilities on ADDUS HOMECARE and AIR PRODCHEMICALS 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 ADDUS HOMECARE with a short position of AIR PRODCHEMICALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of ADDUS HOMECARE and AIR PRODCHEMICALS.
Diversification Opportunities for ADDUS HOMECARE and AIR PRODCHEMICALS
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ADDUS and AIR is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding ADDUS HOMECARE and AIR PRODCHEMICALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIR PRODCHEMICALS and ADDUS HOMECARE 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 ADDUS HOMECARE are associated (or correlated) with AIR PRODCHEMICALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIR PRODCHEMICALS has no effect on the direction of ADDUS HOMECARE i.e., ADDUS HOMECARE and AIR PRODCHEMICALS go up and down completely randomly.
Pair Corralation between ADDUS HOMECARE and AIR PRODCHEMICALS
Assuming the 90 days trading horizon ADDUS HOMECARE is expected to generate 2.0 times more return on investment than AIR PRODCHEMICALS. However, ADDUS HOMECARE is 2.0 times more volatile than AIR PRODCHEMICALS. It trades about 0.19 of its potential returns per unit of risk. AIR PRODCHEMICALS is currently generating about -0.52 per unit of risk. If you would invest 11,600 in ADDUS HOMECARE on October 13, 2024 and sell it today you would earn a total of 600.00 from holding ADDUS HOMECARE or generate 5.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.44% |
| Values | Daily Returns |
ADDUS HOMECARE vs. AIR PRODCHEMICALS
Performance |
| Timeline |
| ADDUS HOMECARE |
| AIR PRODCHEMICALS |
ADDUS HOMECARE and AIR PRODCHEMICALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ADDUS HOMECARE and AIR PRODCHEMICALS
The main advantage of trading using opposite ADDUS HOMECARE and AIR PRODCHEMICALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ADDUS HOMECARE position performs unexpectedly, AIR PRODCHEMICALS 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 AIR PRODCHEMICALS will offset losses from the drop in AIR PRODCHEMICALS's long position.| ADDUS HOMECARE vs. American Homes 4 | ADDUS HOMECARE vs. bet at home AG | ADDUS HOMECARE vs. FEMALE HEALTH | ADDUS HOMECARE vs. CARDINAL HEALTH |
| AIR PRODCHEMICALS vs. Focus Home Interactive | AIR PRODCHEMICALS vs. INVITATION HOMES DL | AIR PRODCHEMICALS vs. WESANA HEALTH HOLD | AIR PRODCHEMICALS vs. ADDUS HOMECARE |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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