Correlation Between American Homes and ADDUS HOMECARE
Can any of the company-specific risk be diversified away by investing in both American Homes and ADDUS HOMECARE 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 American Homes and ADDUS HOMECARE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Homes 4 and ADDUS HOMECARE, you can compare the effects of market volatilities on American Homes and ADDUS HOMECARE 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 American Homes with a short position of ADDUS HOMECARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Homes and ADDUS HOMECARE.
Diversification Opportunities for American Homes and ADDUS HOMECARE
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and ADDUS is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding American Homes 4 and ADDUS HOMECARE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADDUS HOMECARE and American Homes 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 American Homes 4 are associated (or correlated) with ADDUS HOMECARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADDUS HOMECARE has no effect on the direction of American Homes i.e., American Homes and ADDUS HOMECARE go up and down completely randomly.
Pair Corralation between American Homes and ADDUS HOMECARE
Assuming the 90 days trading horizon American Homes is expected to generate 2.39 times less return on investment than ADDUS HOMECARE. In addition to that, American Homes is 1.04 times more volatile than ADDUS HOMECARE. It trades about 0.02 of its total potential returns per unit of risk. ADDUS HOMECARE is currently generating about 0.06 per unit of volatility. If you would invest 11,400 in ADDUS HOMECARE on October 25, 2024 and sell it today you would earn a total of 1,300 from holding ADDUS HOMECARE or generate 11.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Homes 4 vs. ADDUS HOMECARE
Performance |
| Timeline |
| American Homes 4 |
| ADDUS HOMECARE |
American Homes and ADDUS HOMECARE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Homes and ADDUS HOMECARE
The main advantage of trading using opposite American Homes and ADDUS HOMECARE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Homes position performs unexpectedly, ADDUS HOMECARE 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 ADDUS HOMECARE will offset losses from the drop in ADDUS HOMECARE's long position.| American Homes vs. Delta Air Lines | American Homes vs. Ryanair Holdings plc | American Homes vs. Fair Isaac Corp | American Homes vs. BOS BETTER ONLINE |
| ADDUS HOMECARE vs. Check Point Software | ADDUS HOMECARE vs. CANON MARKETING JP | ADDUS HOMECARE vs. UNIVMUSIC GRPADR050 | ADDUS HOMECARE vs. MARKET VECTR RETAIL |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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