Correlation Between Addus HomeCare and SPORTING
Can any of the company-specific risk be diversified away by investing in both Addus HomeCare and SPORTING 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 SPORTING into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Addus HomeCare and SPORTING, you can compare the effects of market volatilities on Addus HomeCare and SPORTING 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 SPORTING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Addus HomeCare and SPORTING.
Diversification Opportunities for Addus HomeCare and SPORTING
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Addus and SPORTING is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Addus HomeCare and SPORTING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPORTING 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 SPORTING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPORTING has no effect on the direction of Addus HomeCare i.e., Addus HomeCare and SPORTING go up and down completely randomly.
Pair Corralation between Addus HomeCare and SPORTING
Assuming the 90 days horizon Addus HomeCare is expected to under-perform the SPORTING. In addition to that, Addus HomeCare is 1.83 times more volatile than SPORTING. It trades about -0.43 of its total potential returns per unit of risk. SPORTING is currently generating about 0.22 per unit of volatility. If you would invest 88.00 in SPORTING on December 4, 2024 and sell it today you would earn a total of 6.00 from holding SPORTING or generate 6.82% 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. SPORTING
Performance |
| Timeline |
| Addus HomeCare |
| SPORTING |
Addus HomeCare and SPORTING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Addus HomeCare and SPORTING
The main advantage of trading using opposite Addus HomeCare and SPORTING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Addus HomeCare position performs unexpectedly, SPORTING 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 SPORTING will offset losses from the drop in SPORTING's long position.| Addus HomeCare vs. Daido Steel Co | Addus HomeCare vs. GOODYEAR T RUBBER | Addus HomeCare vs. Plastic Omnium | Addus HomeCare vs. Mount Gibson Iron |
| SPORTING vs. United States Steel | SPORTING vs. Axfood AB | SPORTING vs. HAPPY BELLY FOOD | SPORTING vs. TOMBADOR IRON LTD |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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