Correlation Between Addus HomeCare and Marriott International
Can any of the company-specific risk be diversified away by investing in both Addus HomeCare and Marriott International 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 Marriott International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Addus HomeCare and Marriott International, you can compare the effects of market volatilities on Addus HomeCare and Marriott International 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 Marriott International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Addus HomeCare and Marriott International.
Diversification Opportunities for Addus HomeCare and Marriott International
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Addus and Marriott is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Addus HomeCare and Marriott International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marriott International 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 Marriott International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marriott International has no effect on the direction of Addus HomeCare i.e., Addus HomeCare and Marriott International go up and down completely randomly.
Pair Corralation between Addus HomeCare and Marriott International
Assuming the 90 days horizon Addus HomeCare is expected to generate 1.26 times more return on investment than Marriott International. However, Addus HomeCare is 1.26 times more volatile than Marriott International. It trades about 0.21 of its potential returns per unit of risk. Marriott International is currently generating about -0.34 per unit of risk. If you would invest 11,300 in Addus HomeCare on October 13, 2024 and sell it today you would earn a total of 600.00 from holding Addus HomeCare or generate 5.31% 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. Marriott International
Performance |
| Timeline |
| Addus HomeCare |
| Marriott International |
Addus HomeCare and Marriott International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Addus HomeCare and Marriott International
The main advantage of trading using opposite Addus HomeCare and Marriott International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Addus HomeCare position performs unexpectedly, Marriott International 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 Marriott International will offset losses from the drop in Marriott International's long position.| Addus HomeCare vs. Universal Health Services | Addus HomeCare vs. Superior Plus Corp | Addus HomeCare vs. NMI Holdings | 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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