Correlation Between Addus HomeCare and Encompass Health
Can any of the company-specific risk be diversified away by investing in both Addus HomeCare and Encompass Health 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 Encompass Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Addus HomeCare and Encompass Health Corp, you can compare the effects of market volatilities on Addus HomeCare and Encompass Health 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 Encompass Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Addus HomeCare and Encompass Health.
Diversification Opportunities for Addus HomeCare and Encompass Health
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Addus and Encompass is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Addus HomeCare and Encompass Health Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Encompass Health Corp 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 Encompass Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Encompass Health Corp has no effect on the direction of Addus HomeCare i.e., Addus HomeCare and Encompass Health go up and down completely randomly.
Pair Corralation between Addus HomeCare and Encompass Health
Given the investment horizon of 90 days Addus HomeCare is expected to under-perform the Encompass Health. In addition to that, Addus HomeCare is 1.11 times more volatile than Encompass Health Corp. It trades about -0.08 of its total potential returns per unit of risk. Encompass Health Corp is currently generating about 0.24 per unit of volatility. If you would invest 9,309 in Encompass Health Corp on August 28, 2024 and sell it today you would earn a total of 891.00 from holding Encompass Health Corp or generate 9.57% 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. Encompass Health Corp
Performance |
| Timeline |
| Addus HomeCare |
| Encompass Health Corp |
Addus HomeCare and Encompass Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Addus HomeCare and Encompass Health
The main advantage of trading using opposite Addus HomeCare and Encompass Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Addus HomeCare position performs unexpectedly, Encompass Health 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 Encompass Health will offset losses from the drop in Encompass Health'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 |
| Encompass Health vs. Pennant Group | Encompass Health vs. The Ensign Group | Encompass Health vs. InnovAge Holding Corp | Encompass Health vs. ModivCare |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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