Correlation Between Addus HomeCare and Merit Medical
Can any of the company-specific risk be diversified away by investing in both Addus HomeCare and Merit Medical 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 Merit Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Addus HomeCare and Merit Medical Systems, you can compare the effects of market volatilities on Addus HomeCare and Merit Medical 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 Merit Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Addus HomeCare and Merit Medical.
Diversification Opportunities for Addus HomeCare and Merit Medical
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Addus and Merit is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Addus HomeCare and Merit Medical Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merit Medical Systems 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 Merit Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merit Medical Systems has no effect on the direction of Addus HomeCare i.e., Addus HomeCare and Merit Medical go up and down completely randomly.
Pair Corralation between Addus HomeCare and Merit Medical
Given the investment horizon of 90 days Addus HomeCare is expected to under-perform the Merit Medical. In addition to that, Addus HomeCare is 1.47 times more volatile than Merit Medical Systems. It trades about -0.13 of its total potential returns per unit of risk. Merit Medical Systems is currently generating about 0.24 per unit of volatility. If you would invest 9,590 in Merit Medical Systems on August 30, 2024 and sell it today you would earn a total of 776.00 from holding Merit Medical Systems or generate 8.09% 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. Merit Medical Systems
Performance |
| Timeline |
| Addus HomeCare |
| Merit Medical Systems |
Addus HomeCare and Merit Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Addus HomeCare and Merit Medical
The main advantage of trading using opposite Addus HomeCare and Merit Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Addus HomeCare position performs unexpectedly, Merit Medical 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 Merit Medical will offset losses from the drop in Merit Medical'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 |
| Merit Medical vs. ReShape Lifesciences | Merit Medical vs. Bone Biologics Corp | Merit Medical vs. Tivic Health Systems | Merit Medical vs. Nuwellis |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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