Correlation Between Addus HomeCare and DexCom
Can any of the company-specific risk be diversified away by investing in both Addus HomeCare and DexCom 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 DexCom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Addus HomeCare and DexCom Inc, you can compare the effects of market volatilities on Addus HomeCare and DexCom 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 DexCom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Addus HomeCare and DexCom.
Diversification Opportunities for Addus HomeCare and DexCom
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Addus and DexCom is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Addus HomeCare and DexCom Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DexCom Inc 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 DexCom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DexCom Inc has no effect on the direction of Addus HomeCare i.e., Addus HomeCare and DexCom go up and down completely randomly.
Pair Corralation between Addus HomeCare and DexCom
Given the investment horizon of 90 days Addus HomeCare is expected to under-perform the DexCom. But the stock apears to be less risky and, when comparing its historical volatility, Addus HomeCare is 1.19 times less risky than DexCom. The stock trades about -0.11 of its potential returns per unit of risk. The DexCom Inc is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 6,704 in DexCom Inc on August 30, 2024 and sell it today you would earn a total of 1,106 from holding DexCom Inc or generate 16.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Addus HomeCare vs. DexCom Inc
Performance |
| Timeline |
| Addus HomeCare |
| DexCom Inc |
Addus HomeCare and DexCom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Addus HomeCare and DexCom
The main advantage of trading using opposite Addus HomeCare and DexCom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Addus HomeCare position performs unexpectedly, DexCom 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 DexCom will offset losses from the drop in DexCom'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 |
| DexCom vs. Tandem Diabetes Care | DexCom vs. Inspire Medical Systems | DexCom vs. Penumbra | DexCom vs. Insulet |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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