Correlation Between ADDUS HOMECARE and CAIRN HOMES
Can any of the company-specific risk be diversified away by investing in both ADDUS HOMECARE and CAIRN HOMES 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 CAIRN HOMES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ADDUS HOMECARE and CAIRN HOMES EO, you can compare the effects of market volatilities on ADDUS HOMECARE and CAIRN HOMES 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 CAIRN HOMES. Check out your portfolio center. Please also check ongoing floating volatility patterns of ADDUS HOMECARE and CAIRN HOMES.
Diversification Opportunities for ADDUS HOMECARE and CAIRN HOMES
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ADDUS and CAIRN is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding ADDUS HOMECARE and CAIRN HOMES EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAIRN HOMES EO 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 CAIRN HOMES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAIRN HOMES EO has no effect on the direction of ADDUS HOMECARE i.e., ADDUS HOMECARE and CAIRN HOMES go up and down completely randomly.
Pair Corralation between ADDUS HOMECARE and CAIRN HOMES
Assuming the 90 days trading horizon ADDUS HOMECARE is expected to generate 0.55 times more return on investment than CAIRN HOMES. However, ADDUS HOMECARE is 1.82 times less risky than CAIRN HOMES. It trades about 0.22 of its potential returns per unit of risk. CAIRN HOMES EO is currently generating about 0.04 per unit of risk. If you would invest 11,500 in ADDUS HOMECARE on October 12, 2024 and sell it today you would earn a total of 700.00 from holding ADDUS HOMECARE or generate 6.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ADDUS HOMECARE vs. CAIRN HOMES EO
Performance |
| Timeline |
| ADDUS HOMECARE |
| CAIRN HOMES EO |
ADDUS HOMECARE and CAIRN HOMES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ADDUS HOMECARE and CAIRN HOMES
The main advantage of trading using opposite ADDUS HOMECARE and CAIRN HOMES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ADDUS HOMECARE position performs unexpectedly, CAIRN HOMES 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 CAIRN HOMES will offset losses from the drop in CAIRN HOMES's long position.| ADDUS HOMECARE vs. American Eagle Outfitters | ADDUS HOMECARE vs. JSC Halyk bank | ADDUS HOMECARE vs. OBSERVE MEDICAL ASA | ADDUS HOMECARE vs. Synovus Financial Corp |
| CAIRN HOMES vs. ADDUS HOMECARE | CAIRN HOMES vs. RELIANCE STEEL AL | CAIRN HOMES vs. Corporate Office Properties | CAIRN HOMES vs. Haverty Furniture Companies |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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