Correlation Between ADDUS HOMECARE and Japan Tobacco
Can any of the company-specific risk be diversified away by investing in both ADDUS HOMECARE and Japan Tobacco 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 Japan Tobacco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ADDUS HOMECARE and Japan Tobacco, you can compare the effects of market volatilities on ADDUS HOMECARE and Japan Tobacco 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 Japan Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of ADDUS HOMECARE and Japan Tobacco.
Diversification Opportunities for ADDUS HOMECARE and Japan Tobacco
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ADDUS and Japan is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding ADDUS HOMECARE and Japan Tobacco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Japan Tobacco 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 Japan Tobacco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Japan Tobacco has no effect on the direction of ADDUS HOMECARE i.e., ADDUS HOMECARE and Japan Tobacco go up and down completely randomly.
Pair Corralation between ADDUS HOMECARE and Japan Tobacco
Assuming the 90 days trading horizon ADDUS HOMECARE is expected to generate 0.69 times more return on investment than Japan Tobacco. However, ADDUS HOMECARE is 1.45 times less risky than Japan Tobacco. It trades about 0.28 of its potential returns per unit of risk. Japan Tobacco is currently generating about -0.1 per unit of risk. If you would invest 12,300 in ADDUS HOMECARE on October 24, 2024 and sell it today you would earn a total of 700.00 from holding ADDUS HOMECARE or generate 5.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ADDUS HOMECARE vs. Japan Tobacco
Performance |
| Timeline |
| ADDUS HOMECARE |
| Japan Tobacco |
ADDUS HOMECARE and Japan Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ADDUS HOMECARE and Japan Tobacco
The main advantage of trading using opposite ADDUS HOMECARE and Japan Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ADDUS HOMECARE position performs unexpectedly, Japan Tobacco 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 Japan Tobacco will offset losses from the drop in Japan Tobacco's long position.| ADDUS HOMECARE vs. CanSino Biologics | ADDUS HOMECARE vs. ScanSource | ADDUS HOMECARE vs. TreeHouse Foods | ADDUS HOMECARE vs. United Natural Foods |
| Japan Tobacco vs. ADDUS HOMECARE | Japan Tobacco vs. BRIT AMER TOBACCO | Japan Tobacco vs. MCEWEN MINING INC | Japan Tobacco vs. KENEDIX OFFICE INV |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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