Correlation Between Addus HomeCare and IMAC Holdings
Can any of the company-specific risk be diversified away by investing in both Addus HomeCare and IMAC Holdings 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 IMAC Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Addus HomeCare and IMAC Holdings, you can compare the effects of market volatilities on Addus HomeCare and IMAC Holdings 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 IMAC Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Addus HomeCare and IMAC Holdings.
Diversification Opportunities for Addus HomeCare and IMAC Holdings
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Addus and IMAC is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Addus HomeCare and IMAC Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IMAC Holdings 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 IMAC Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IMAC Holdings has no effect on the direction of Addus HomeCare i.e., Addus HomeCare and IMAC Holdings go up and down completely randomly.
Pair Corralation between Addus HomeCare and IMAC Holdings
Given the investment horizon of 90 days Addus HomeCare is expected to generate 0.31 times more return on investment than IMAC Holdings. However, Addus HomeCare is 3.2 times less risky than IMAC Holdings. It trades about -0.04 of its potential returns per unit of risk. IMAC Holdings is currently generating about -0.12 per unit of risk. If you would invest 13,108 in Addus HomeCare on August 29, 2024 and sell it today you would lose (667.00) from holding Addus HomeCare or give up 5.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Addus HomeCare vs. IMAC Holdings
Performance |
| Timeline |
| Addus HomeCare |
| IMAC Holdings |
Addus HomeCare and IMAC Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Addus HomeCare and IMAC Holdings
The main advantage of trading using opposite Addus HomeCare and IMAC Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Addus HomeCare position performs unexpectedly, IMAC Holdings 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 IMAC Holdings will offset losses from the drop in IMAC Holdings' long position.| Addus HomeCare vs. Encompass Health Corp | Addus HomeCare vs. Pennant Group | Addus HomeCare vs. Acadia Healthcare | Addus HomeCare vs. Select Medical Holdings |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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