Correlation Between Addus HomeCare and USWE SPORTS
Can any of the company-specific risk be diversified away by investing in both Addus HomeCare and USWE SPORTS 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 USWE SPORTS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Addus HomeCare and USWE SPORTS AB, you can compare the effects of market volatilities on Addus HomeCare and USWE SPORTS 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 USWE SPORTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Addus HomeCare and USWE SPORTS.
Diversification Opportunities for Addus HomeCare and USWE SPORTS
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Addus and USWE is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Addus HomeCare and USWE SPORTS AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on USWE SPORTS AB 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 USWE SPORTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of USWE SPORTS AB has no effect on the direction of Addus HomeCare i.e., Addus HomeCare and USWE SPORTS go up and down completely randomly.
Pair Corralation between Addus HomeCare and USWE SPORTS
Assuming the 90 days horizon Addus HomeCare is expected to generate 0.56 times more return on investment than USWE SPORTS. However, Addus HomeCare is 1.79 times less risky than USWE SPORTS. It trades about 0.02 of its potential returns per unit of risk. USWE SPORTS AB is currently generating about -0.03 per unit of risk. If you would invest 10,000 in Addus HomeCare on August 28, 2024 and sell it today you would earn a total of 1,300 from holding Addus HomeCare or generate 13.0% 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. USWE SPORTS AB
Performance |
| Timeline |
| Addus HomeCare |
| USWE SPORTS AB |
Addus HomeCare and USWE SPORTS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Addus HomeCare and USWE SPORTS
The main advantage of trading using opposite Addus HomeCare and USWE SPORTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Addus HomeCare position performs unexpectedly, USWE SPORTS 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 USWE SPORTS will offset losses from the drop in USWE SPORTS's long position.| Addus HomeCare vs. Ramsay Health Care | Addus HomeCare vs. Superior Plus Corp | Addus HomeCare vs. NMI Holdings | Addus HomeCare vs. Origin Agritech |
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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