Correlation Between ADDUS HOMECARE and Vulcan Materials
Can any of the company-specific risk be diversified away by investing in both ADDUS HOMECARE and Vulcan Materials 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 Vulcan Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ADDUS HOMECARE and Vulcan Materials, you can compare the effects of market volatilities on ADDUS HOMECARE and Vulcan Materials 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 Vulcan Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of ADDUS HOMECARE and Vulcan Materials.
Diversification Opportunities for ADDUS HOMECARE and Vulcan Materials
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ADDUS and Vulcan is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding ADDUS HOMECARE and Vulcan Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vulcan Materials 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 Vulcan Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vulcan Materials has no effect on the direction of ADDUS HOMECARE i.e., ADDUS HOMECARE and Vulcan Materials go up and down completely randomly.
Pair Corralation between ADDUS HOMECARE and Vulcan Materials
Assuming the 90 days trading horizon ADDUS HOMECARE is expected to generate 4.75 times less return on investment than Vulcan Materials. In addition to that, ADDUS HOMECARE is 1.41 times more volatile than Vulcan Materials. It trades about 0.03 of its total potential returns per unit of risk. Vulcan Materials is currently generating about 0.2 per unit of volatility. If you would invest 24,800 in Vulcan Materials on November 5, 2024 and sell it today you would earn a total of 1,400 from holding Vulcan Materials or generate 5.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ADDUS HOMECARE vs. Vulcan Materials
Performance |
| Timeline |
| ADDUS HOMECARE |
| Vulcan Materials |
ADDUS HOMECARE and Vulcan Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ADDUS HOMECARE and Vulcan Materials
The main advantage of trading using opposite ADDUS HOMECARE and Vulcan Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ADDUS HOMECARE position performs unexpectedly, Vulcan Materials 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 Vulcan Materials will offset losses from the drop in Vulcan Materials' long position.| ADDUS HOMECARE vs. SIVERS SEMICONDUCTORS AB | ADDUS HOMECARE vs. NorAm Drilling AS | ADDUS HOMECARE vs. Volkswagen AG | ADDUS HOMECARE vs. Darden Restaurants |
| Vulcan Materials vs. Compagnie Plastic Omnium | Vulcan Materials vs. Plastic Omnium | Vulcan Materials vs. Summit Materials | Vulcan Materials vs. INTER CARS 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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