Correlation Between Addus HomeCare and INVITATION HOMES
Can any of the company-specific risk be diversified away by investing in both Addus HomeCare and INVITATION 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 INVITATION 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 INVITATION HOMES DL, you can compare the effects of market volatilities on Addus HomeCare and INVITATION 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 INVITATION HOMES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Addus HomeCare and INVITATION HOMES.
Diversification Opportunities for Addus HomeCare and INVITATION HOMES
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Addus and INVITATION is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Addus HomeCare and INVITATION HOMES DL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INVITATION HOMES 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 INVITATION HOMES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INVITATION HOMES has no effect on the direction of Addus HomeCare i.e., Addus HomeCare and INVITATION HOMES go up and down completely randomly.
Pair Corralation between Addus HomeCare and INVITATION HOMES
Assuming the 90 days horizon Addus HomeCare is expected to generate 1.56 times more return on investment than INVITATION HOMES. However, Addus HomeCare is 1.56 times more volatile than INVITATION HOMES DL. It trades about 0.05 of its potential returns per unit of risk. INVITATION HOMES DL is currently generating about 0.02 per unit of risk. If you would invest 10,200 in Addus HomeCare on September 2, 2024 and sell it today you would earn a total of 1,100 from holding Addus HomeCare or generate 10.78% 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. INVITATION HOMES DL
Performance |
| Timeline |
| Addus HomeCare |
| INVITATION HOMES |
Addus HomeCare and INVITATION HOMES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Addus HomeCare and INVITATION HOMES
The main advantage of trading using opposite Addus HomeCare and INVITATION HOMES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Addus HomeCare position performs unexpectedly, INVITATION 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 INVITATION HOMES will offset losses from the drop in INVITATION HOMES's long position.| Addus HomeCare vs. Richter Gedeon Vegyszeti | Addus HomeCare vs. Charoen Pokphand Foods | Addus HomeCare vs. Superior Plus Corp | Addus HomeCare vs. Origin Agritech |
| INVITATION HOMES vs. Natural Health Trends | INVITATION HOMES vs. Ramsay Health Care | INVITATION HOMES vs. Ryanair Holdings plc | INVITATION HOMES vs. SEALED AIR |
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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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