Correlation Between Addus HomeCare and InPlay Oil
Can any of the company-specific risk be diversified away by investing in both Addus HomeCare and InPlay Oil 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 InPlay Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Addus HomeCare and InPlay Oil Corp, you can compare the effects of market volatilities on Addus HomeCare and InPlay Oil 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 InPlay Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Addus HomeCare and InPlay Oil.
Diversification Opportunities for Addus HomeCare and InPlay Oil
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Addus and InPlay is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Addus HomeCare and InPlay Oil Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InPlay Oil Corp 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 InPlay Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InPlay Oil Corp has no effect on the direction of Addus HomeCare i.e., Addus HomeCare and InPlay Oil go up and down completely randomly.
Pair Corralation between Addus HomeCare and InPlay Oil
Assuming the 90 days horizon Addus HomeCare is expected to generate 1.59 times more return on investment than InPlay Oil. However, Addus HomeCare is 1.59 times more volatile than InPlay Oil Corp. It trades about 0.03 of its potential returns per unit of risk. InPlay Oil Corp is currently generating about -0.29 per unit of risk. If you would invest 11,900 in Addus HomeCare on November 7, 2024 and sell it today you would earn a total of 100.00 from holding Addus HomeCare or generate 0.84% 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. InPlay Oil Corp
Performance |
| Timeline |
| Addus HomeCare |
| InPlay Oil Corp |
Addus HomeCare and InPlay Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Addus HomeCare and InPlay Oil
The main advantage of trading using opposite Addus HomeCare and InPlay Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Addus HomeCare position performs unexpectedly, InPlay Oil 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 InPlay Oil will offset losses from the drop in InPlay Oil's long position.| Addus HomeCare vs. Regal Hotels International | Addus HomeCare vs. New Residential Investment | Addus HomeCare vs. Odyssean Investment Trust | Addus HomeCare vs. Summit Hotel Properties |
| InPlay Oil vs. PICKN PAY STORES | InPlay Oil vs. JAPAN TOBACCO UNSPADR12 | InPlay Oil vs. Firan Technology Group | InPlay Oil vs. Japan Tobacco |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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