Correlation Between Addus HomeCare and Columbia Sportswear
Can any of the company-specific risk be diversified away by investing in both Addus HomeCare and Columbia Sportswear 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 Columbia Sportswear into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Addus HomeCare and Columbia Sportswear, you can compare the effects of market volatilities on Addus HomeCare and Columbia Sportswear 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 Columbia Sportswear. Check out your portfolio center. Please also check ongoing floating volatility patterns of Addus HomeCare and Columbia Sportswear.
Diversification Opportunities for Addus HomeCare and Columbia Sportswear
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Addus and Columbia is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Addus HomeCare and Columbia Sportswear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Sportswear 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 Columbia Sportswear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Sportswear has no effect on the direction of Addus HomeCare i.e., Addus HomeCare and Columbia Sportswear go up and down completely randomly.
Pair Corralation between Addus HomeCare and Columbia Sportswear
Assuming the 90 days horizon Addus HomeCare is expected to generate 1.17 times more return on investment than Columbia Sportswear. However, Addus HomeCare is 1.17 times more volatile than Columbia Sportswear. It trades about 0.08 of its potential returns per unit of risk. Columbia Sportswear is currently generating about 0.04 per unit of risk. If you would invest 7,750 in Addus HomeCare on September 1, 2024 and sell it today you would earn a total of 3,550 from holding Addus HomeCare or generate 45.81% 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. Columbia Sportswear
Performance |
| Timeline |
| Addus HomeCare |
| Columbia Sportswear |
Addus HomeCare and Columbia Sportswear Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Addus HomeCare and Columbia Sportswear
The main advantage of trading using opposite Addus HomeCare and Columbia Sportswear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Addus HomeCare position performs unexpectedly, Columbia Sportswear 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 Columbia Sportswear will offset losses from the drop in Columbia Sportswear'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 |
| Columbia Sportswear vs. Ralph Lauren | Columbia Sportswear vs. Superior Plus Corp | Columbia Sportswear vs. NMI Holdings | Columbia Sportswear 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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