Correlation Between ADDUS HOMECARE and Rheinmetall
Can any of the company-specific risk be diversified away by investing in both ADDUS HOMECARE and Rheinmetall 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 Rheinmetall into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ADDUS HOMECARE and Rheinmetall AG, you can compare the effects of market volatilities on ADDUS HOMECARE and Rheinmetall 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 Rheinmetall. Check out your portfolio center. Please also check ongoing floating volatility patterns of ADDUS HOMECARE and Rheinmetall.
Diversification Opportunities for ADDUS HOMECARE and Rheinmetall
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between ADDUS and Rheinmetall is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding ADDUS HOMECARE and Rheinmetall AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rheinmetall AG 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 Rheinmetall. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rheinmetall AG has no effect on the direction of ADDUS HOMECARE i.e., ADDUS HOMECARE and Rheinmetall go up and down completely randomly.
Pair Corralation between ADDUS HOMECARE and Rheinmetall
Assuming the 90 days trading horizon ADDUS HOMECARE is expected to generate 4.43 times less return on investment than Rheinmetall. But when comparing it to its historical volatility, ADDUS HOMECARE is 1.01 times less risky than Rheinmetall. It trades about 0.03 of its potential returns per unit of risk. Rheinmetall AG is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 21,764 in Rheinmetall AG on October 13, 2024 and sell it today you would earn a total of 43,216 from holding Rheinmetall AG or generate 198.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ADDUS HOMECARE vs. Rheinmetall AG
Performance |
| Timeline |
| ADDUS HOMECARE |
| Rheinmetall AG |
ADDUS HOMECARE and Rheinmetall Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ADDUS HOMECARE and Rheinmetall
The main advantage of trading using opposite ADDUS HOMECARE and Rheinmetall positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ADDUS HOMECARE position performs unexpectedly, Rheinmetall 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 Rheinmetall will offset losses from the drop in Rheinmetall'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 |
| Rheinmetall vs. Bio Techne Corp | Rheinmetall vs. DFS Furniture PLC | Rheinmetall vs. ADDUS HOMECARE | Rheinmetall vs. Aedas Homes SA |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
Other Complementary Tools
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |