Correlation Between Addus HomeCare and General Mills
Can any of the company-specific risk be diversified away by investing in both Addus HomeCare and General Mills 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 General Mills into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Addus HomeCare and General Mills, you can compare the effects of market volatilities on Addus HomeCare and General Mills 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 General Mills. Check out your portfolio center. Please also check ongoing floating volatility patterns of Addus HomeCare and General Mills.
Diversification Opportunities for Addus HomeCare and General Mills
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Addus and General is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Addus HomeCare and General Mills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Mills 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 General Mills. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Mills has no effect on the direction of Addus HomeCare i.e., Addus HomeCare and General Mills go up and down completely randomly.
Pair Corralation between Addus HomeCare and General Mills
Assuming the 90 days horizon Addus HomeCare is expected to generate 1.74 times more return on investment than General Mills. However, Addus HomeCare is 1.74 times more volatile than General Mills. It trades about 0.07 of its potential returns per unit of risk. General Mills is currently generating about 0.03 per unit of risk. If you would invest 7,800 in Addus HomeCare on September 4, 2024 and sell it today you would earn a total of 3,500 from holding Addus HomeCare or generate 44.87% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Addus HomeCare vs. General Mills
Performance |
Timeline |
Addus HomeCare |
General Mills |
Addus HomeCare and General Mills Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Addus HomeCare and General Mills
The main advantage of trading using opposite Addus HomeCare and General Mills positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Addus HomeCare position performs unexpectedly, General Mills 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 General Mills will offset losses from the drop in General Mills' long position.Addus HomeCare vs. Superior Plus Corp | Addus HomeCare vs. NMI Holdings | Addus HomeCare vs. Origin Agritech | Addus HomeCare vs. SIVERS SEMICONDUCTORS AB |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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