Correlation Between Addus HomeCare and Franklin Street
Can any of the company-specific risk be diversified away by investing in both Addus HomeCare and Franklin Street 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 Franklin Street into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Addus HomeCare and Franklin Street Properties, you can compare the effects of market volatilities on Addus HomeCare and Franklin Street 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 Franklin Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Addus HomeCare and Franklin Street.
Diversification Opportunities for Addus HomeCare and Franklin Street
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Addus and Franklin is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Addus HomeCare and Franklin Street Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Street Prop 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 Franklin Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Street Prop has no effect on the direction of Addus HomeCare i.e., Addus HomeCare and Franklin Street go up and down completely randomly.
Pair Corralation between Addus HomeCare and Franklin Street
Given the investment horizon of 90 days Addus HomeCare is expected to generate 0.64 times more return on investment than Franklin Street. However, Addus HomeCare is 1.57 times less risky than Franklin Street. It trades about 0.08 of its potential returns per unit of risk. Franklin Street Properties is currently generating about -0.01 per unit of risk. If you would invest 8,916 in Addus HomeCare on August 24, 2024 and sell it today you would earn a total of 3,284 from holding Addus HomeCare or generate 36.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Addus HomeCare vs. Franklin Street Properties
Performance |
| Timeline |
| Addus HomeCare |
| Franklin Street Prop |
Addus HomeCare and Franklin Street Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Addus HomeCare and Franklin Street
The main advantage of trading using opposite Addus HomeCare and Franklin Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Addus HomeCare position performs unexpectedly, Franklin Street 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 Franklin Street will offset losses from the drop in Franklin Street'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 |
| Franklin Street vs. Cousins Properties Incorporated | Franklin Street vs. Highwoods Properties | Franklin Street vs. Douglas Emmett | Franklin Street vs. Equity Commonwealth |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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