Correlation Between Addus HomeCare and Federal Agricultural
Can any of the company-specific risk be diversified away by investing in both Addus HomeCare and Federal Agricultural 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 Federal Agricultural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Addus HomeCare and Federal Agricultural Mortgage, you can compare the effects of market volatilities on Addus HomeCare and Federal Agricultural 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 Federal Agricultural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Addus HomeCare and Federal Agricultural.
Diversification Opportunities for Addus HomeCare and Federal Agricultural
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Addus and Federal is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Addus HomeCare and Federal Agricultural Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Agricultural 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 Federal Agricultural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Agricultural has no effect on the direction of Addus HomeCare i.e., Addus HomeCare and Federal Agricultural go up and down completely randomly.
Pair Corralation between Addus HomeCare and Federal Agricultural
Assuming the 90 days horizon Addus HomeCare is expected to generate 0.95 times more return on investment than Federal Agricultural. However, Addus HomeCare is 1.06 times less risky than Federal Agricultural. It trades about 0.22 of its potential returns per unit of risk. Federal Agricultural Mortgage is currently generating about -0.23 per unit of risk. If you would invest 11,200 in Addus HomeCare on October 11, 2024 and sell it today you would earn a total of 700.00 from holding Addus HomeCare or generate 6.25% 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. Federal Agricultural Mortgage
Performance |
| Timeline |
| Addus HomeCare |
| Federal Agricultural |
Addus HomeCare and Federal Agricultural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Addus HomeCare and Federal Agricultural
The main advantage of trading using opposite Addus HomeCare and Federal Agricultural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Addus HomeCare position performs unexpectedly, Federal Agricultural 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 Federal Agricultural will offset losses from the drop in Federal Agricultural's long position.| Addus HomeCare vs. VITEC SOFTWARE GROUP | Addus HomeCare vs. FIREWEED METALS P | Addus HomeCare vs. GRIFFIN MINING LTD | Addus HomeCare vs. OPERA SOFTWARE |
| Federal Agricultural vs. Aedas Homes SA | Federal Agricultural vs. American Homes 4 | Federal Agricultural vs. Addus HomeCare | Federal Agricultural vs. Haverty Furniture Companies |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
Other Complementary Tools
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |