Correlation Between Addus HomeCare and Nufarm
Can any of the company-specific risk be diversified away by investing in both Addus HomeCare and Nufarm 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 Nufarm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Addus HomeCare and Nufarm Limited, you can compare the effects of market volatilities on Addus HomeCare and Nufarm 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 Nufarm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Addus HomeCare and Nufarm.
Diversification Opportunities for Addus HomeCare and Nufarm
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Addus and Nufarm is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Addus HomeCare and Nufarm Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nufarm Limited 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 Nufarm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nufarm Limited has no effect on the direction of Addus HomeCare i.e., Addus HomeCare and Nufarm go up and down completely randomly.
Pair Corralation between Addus HomeCare and Nufarm
Assuming the 90 days horizon Addus HomeCare is expected to generate 1.16 times more return on investment than Nufarm. However, Addus HomeCare is 1.16 times more volatile than Nufarm Limited. It trades about 0.07 of its potential returns per unit of risk. Nufarm Limited is currently generating about -0.06 per unit of risk. If you would invest 8,350 in Addus HomeCare on September 12, 2024 and sell it today you would earn a total of 2,850 from holding Addus HomeCare or generate 34.13% 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. Nufarm Limited
Performance |
| Timeline |
| Addus HomeCare |
| Nufarm Limited |
Addus HomeCare and Nufarm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Addus HomeCare and Nufarm
The main advantage of trading using opposite Addus HomeCare and Nufarm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Addus HomeCare position performs unexpectedly, Nufarm 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 Nufarm will offset losses from the drop in Nufarm's long position.| Addus HomeCare vs. Ramsay Health Care | Addus HomeCare vs. Universal Health Services | Addus HomeCare vs. Superior Plus Corp | Addus HomeCare vs. SIVERS SEMICONDUCTORS AB |
| Nufarm vs. Superior Plus Corp | Nufarm vs. SIVERS SEMICONDUCTORS AB | Nufarm vs. NorAm Drilling AS | Nufarm vs. Norsk Hydro ASA |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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