Correlation Between Addus HomeCare and New Residential
Can any of the company-specific risk be diversified away by investing in both Addus HomeCare and New Residential 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 New Residential into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Addus HomeCare and New Residential Investment, you can compare the effects of market volatilities on Addus HomeCare and New Residential 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 New Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of Addus HomeCare and New Residential.
Diversification Opportunities for Addus HomeCare and New Residential
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Addus and New is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Addus HomeCare and New Residential Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Residential Inve 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 New Residential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Residential Inve has no effect on the direction of Addus HomeCare i.e., Addus HomeCare and New Residential go up and down completely randomly.
Pair Corralation between Addus HomeCare and New Residential
Assuming the 90 days horizon Addus HomeCare is expected to generate 4.35 times less return on investment than New Residential. In addition to that, Addus HomeCare is 1.69 times more volatile than New Residential Investment. It trades about 0.03 of its total potential returns per unit of risk. New Residential Investment is currently generating about 0.21 per unit of volatility. If you would invest 1,020 in New Residential Investment on October 28, 2024 and sell it today you would earn a total of 56.00 from holding New Residential Investment or generate 5.49% 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. New Residential Investment
Performance |
| Timeline |
| Addus HomeCare |
| New Residential Inve |
Addus HomeCare and New Residential Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Addus HomeCare and New Residential
The main advantage of trading using opposite Addus HomeCare and New Residential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Addus HomeCare position performs unexpectedly, New Residential 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 New Residential will offset losses from the drop in New Residential's long position.| Addus HomeCare vs. Fresenius Medical Care | Addus HomeCare vs. Chemed | Addus HomeCare vs. Superior Plus Corp | Addus HomeCare vs. Origin Agritech |
| New Residential vs. CHINA HUARONG ENERHD 50 | New Residential vs. Huntington Bancshares Incorporated | New Residential vs. NorAm Drilling AS | New Residential vs. Rheinmetall AG |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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