Correlation Between Addus HomeCare and NXP Semiconductors
Can any of the company-specific risk be diversified away by investing in both Addus HomeCare and NXP Semiconductors 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 NXP Semiconductors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Addus HomeCare and NXP Semiconductors NV, you can compare the effects of market volatilities on Addus HomeCare and NXP Semiconductors 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 NXP Semiconductors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Addus HomeCare and NXP Semiconductors.
Diversification Opportunities for Addus HomeCare and NXP Semiconductors
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Addus and NXP is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Addus HomeCare and NXP Semiconductors NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NXP Semiconductors 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 NXP Semiconductors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NXP Semiconductors has no effect on the direction of Addus HomeCare i.e., Addus HomeCare and NXP Semiconductors go up and down completely randomly.
Pair Corralation between Addus HomeCare and NXP Semiconductors
Assuming the 90 days horizon Addus HomeCare is expected to generate 1.03 times more return on investment than NXP Semiconductors. However, Addus HomeCare is 1.03 times more volatile than NXP Semiconductors NV. It trades about 0.07 of its potential returns per unit of risk. NXP Semiconductors NV is currently generating about 0.03 per unit of risk. If you would invest 8,350 in Addus HomeCare on September 4, 2024 and sell it today you would earn a total of 2,950 from holding Addus HomeCare or generate 35.33% 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. NXP Semiconductors NV
Performance |
| Timeline |
| Addus HomeCare |
| NXP Semiconductors |
Addus HomeCare and NXP Semiconductors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Addus HomeCare and NXP Semiconductors
The main advantage of trading using opposite Addus HomeCare and NXP Semiconductors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Addus HomeCare position performs unexpectedly, NXP Semiconductors 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 NXP Semiconductors will offset losses from the drop in NXP Semiconductors' long position.| Addus HomeCare vs. Superior Plus Corp | Addus HomeCare vs. NMI Holdings | Addus HomeCare vs. Origin Agritech | Addus HomeCare vs. SIVERS SEMICONDUCTORS AB |
| NXP Semiconductors vs. TOTAL GABON | NXP Semiconductors vs. Walgreens Boots Alliance | NXP Semiconductors vs. Peak Resources Limited |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
Other Complementary Tools
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities |