Correlation Between Addus HomeCare and American Shared
Can any of the company-specific risk be diversified away by investing in both Addus HomeCare and American Shared 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 American Shared into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Addus HomeCare and American Shared Hospital, you can compare the effects of market volatilities on Addus HomeCare and American Shared 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 American Shared. Check out your portfolio center. Please also check ongoing floating volatility patterns of Addus HomeCare and American Shared.
Diversification Opportunities for Addus HomeCare and American Shared
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Addus and American is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Addus HomeCare and American Shared Hospital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Shared Hospital 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 American Shared. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Shared Hospital has no effect on the direction of Addus HomeCare i.e., Addus HomeCare and American Shared go up and down completely randomly.
Pair Corralation between Addus HomeCare and American Shared
Given the investment horizon of 90 days Addus HomeCare is expected to generate 0.46 times more return on investment than American Shared. However, Addus HomeCare is 2.16 times less risky than American Shared. It trades about 0.2 of its potential returns per unit of risk. American Shared Hospital is currently generating about -0.02 per unit of risk. If you would invest 12,886 in Addus HomeCare on October 22, 2024 and sell it today you would earn a total of 501.00 from holding Addus HomeCare or generate 3.89% 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. American Shared Hospital
Performance |
| Timeline |
| Addus HomeCare |
| American Shared Hospital |
Addus HomeCare and American Shared Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Addus HomeCare and American Shared
The main advantage of trading using opposite Addus HomeCare and American Shared positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Addus HomeCare position performs unexpectedly, American Shared 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 American Shared will offset losses from the drop in American Shared's long position.| Addus HomeCare vs. Encompass Health Corp | Addus HomeCare vs. Pennant Group | Addus HomeCare vs. Acadia Healthcare | Addus HomeCare vs. Select Medical Holdings |
| American Shared vs. Ramsay Health Care | American Shared vs. Medical Facilities | American Shared vs. Jack Nathan Medical | American Shared vs. Fresenius SE Co |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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