Correlation Between Addus HomeCare and Sandstorm Gold
Can any of the company-specific risk be diversified away by investing in both Addus HomeCare and Sandstorm Gold 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 Sandstorm Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Addus HomeCare and Sandstorm Gold Ltd, you can compare the effects of market volatilities on Addus HomeCare and Sandstorm Gold 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 Sandstorm Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Addus HomeCare and Sandstorm Gold.
Diversification Opportunities for Addus HomeCare and Sandstorm Gold
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Addus and Sandstorm is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Addus HomeCare and Sandstorm Gold Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandstorm Gold 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 Sandstorm Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sandstorm Gold has no effect on the direction of Addus HomeCare i.e., Addus HomeCare and Sandstorm Gold go up and down completely randomly.
Pair Corralation between Addus HomeCare and Sandstorm Gold
Given the investment horizon of 90 days Addus HomeCare is expected to under-perform the Sandstorm Gold. But the stock apears to be less risky and, when comparing its historical volatility, Addus HomeCare is 1.43 times less risky than Sandstorm Gold. The stock trades about -0.06 of its potential returns per unit of risk. The Sandstorm Gold Ltd is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 560.00 in Sandstorm Gold Ltd on August 31, 2024 and sell it today you would earn a total of 23.00 from holding Sandstorm Gold Ltd or generate 4.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Addus HomeCare vs. Sandstorm Gold Ltd
Performance |
| Timeline |
| Addus HomeCare |
| Sandstorm Gold |
Addus HomeCare and Sandstorm Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Addus HomeCare and Sandstorm Gold
The main advantage of trading using opposite Addus HomeCare and Sandstorm Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Addus HomeCare position performs unexpectedly, Sandstorm Gold 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 Sandstorm Gold will offset losses from the drop in Sandstorm Gold'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 |
| Sandstorm Gold vs. Franco Nevada | Sandstorm Gold vs. Alamos Gold | Sandstorm Gold vs. Seabridge Gold | Sandstorm Gold vs. Agnico Eagle Mines |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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