Correlation Between Addus HomeCare and Boot Barn
Can any of the company-specific risk be diversified away by investing in both Addus HomeCare and Boot Barn 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 Boot Barn into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Addus HomeCare and Boot Barn Holdings, you can compare the effects of market volatilities on Addus HomeCare and Boot Barn 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 Boot Barn. Check out your portfolio center. Please also check ongoing floating volatility patterns of Addus HomeCare and Boot Barn.
Diversification Opportunities for Addus HomeCare and Boot Barn
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Addus and Boot is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Addus HomeCare and Boot Barn Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boot Barn 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 Boot Barn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boot Barn Holdings has no effect on the direction of Addus HomeCare i.e., Addus HomeCare and Boot Barn go up and down completely randomly.
Pair Corralation between Addus HomeCare and Boot Barn
Given the investment horizon of 90 days Addus HomeCare is expected to generate 1.39 times less return on investment than Boot Barn. But when comparing it to its historical volatility, Addus HomeCare is 1.88 times less risky than Boot Barn. It trades about 0.1 of its potential returns per unit of risk. Boot Barn Holdings is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 10,475 in Boot Barn Holdings on September 3, 2024 and sell it today you would earn a total of 3,239 from holding Boot Barn Holdings or generate 30.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Addus HomeCare vs. Boot Barn Holdings
Performance |
| Timeline |
| Addus HomeCare |
| Boot Barn Holdings |
Addus HomeCare and Boot Barn Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Addus HomeCare and Boot Barn
The main advantage of trading using opposite Addus HomeCare and Boot Barn positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Addus HomeCare position performs unexpectedly, Boot Barn 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 Boot Barn will offset losses from the drop in Boot Barn's long position.| Addus HomeCare vs. Select Medical Holdings | Addus HomeCare vs. Encompass Health Corp | Addus HomeCare vs. Pennant Group | Addus HomeCare vs. InnovAge Holding Corp |
| Boot Barn vs. Ross Stores | Boot Barn vs. Childrens Place | Boot Barn vs. Buckle Inc | Boot Barn vs. Guess Inc |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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