Correlation Between Addus HomeCare and Fortrea Holdings
Can any of the company-specific risk be diversified away by investing in both Addus HomeCare and Fortrea 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 Fortrea 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 Fortrea Holdings, you can compare the effects of market volatilities on Addus HomeCare and Fortrea 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 Fortrea Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Addus HomeCare and Fortrea Holdings.
Diversification Opportunities for Addus HomeCare and Fortrea Holdings
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Addus and Fortrea is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Addus HomeCare and Fortrea Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortrea 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 Fortrea Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortrea Holdings has no effect on the direction of Addus HomeCare i.e., Addus HomeCare and Fortrea Holdings go up and down completely randomly.
Pair Corralation between Addus HomeCare and Fortrea Holdings
Given the investment horizon of 90 days Addus HomeCare is expected to generate 0.36 times more return on investment than Fortrea Holdings. However, Addus HomeCare is 2.8 times less risky than Fortrea Holdings. It trades about -0.12 of its potential returns per unit of risk. Fortrea Holdings is currently generating about -0.06 per unit of risk. If you would invest 12,795 in Addus HomeCare on September 12, 2024 and sell it today you would lose (499.00) from holding Addus HomeCare or give up 3.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Addus HomeCare vs. Fortrea Holdings
Performance |
| Timeline |
| Addus HomeCare |
| Fortrea Holdings |
Addus HomeCare and Fortrea Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Addus HomeCare and Fortrea Holdings
The main advantage of trading using opposite Addus HomeCare and Fortrea Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Addus HomeCare position performs unexpectedly, Fortrea 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 Fortrea Holdings will offset losses from the drop in Fortrea 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 |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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