Correlation Between Addus HomeCare and Skechers USA
Can any of the company-specific risk be diversified away by investing in both Addus HomeCare and Skechers USA 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 Skechers USA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Addus HomeCare and Skechers USA, you can compare the effects of market volatilities on Addus HomeCare and Skechers USA 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 Skechers USA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Addus HomeCare and Skechers USA.
Diversification Opportunities for Addus HomeCare and Skechers USA
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Addus and Skechers is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Addus HomeCare and Skechers USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skechers USA 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 Skechers USA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skechers USA has no effect on the direction of Addus HomeCare i.e., Addus HomeCare and Skechers USA go up and down completely randomly.
Pair Corralation between Addus HomeCare and Skechers USA
Given the investment horizon of 90 days Addus HomeCare is expected to generate 0.83 times more return on investment than Skechers USA. However, Addus HomeCare is 1.2 times less risky than Skechers USA. It trades about 0.1 of its potential returns per unit of risk. Skechers USA is currently generating about -0.01 per unit of risk. If you would invest 9,789 in Addus HomeCare on September 3, 2024 and sell it today you would earn a total of 2,495 from holding Addus HomeCare or generate 25.49% 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. Skechers USA
Performance |
| Timeline |
| Addus HomeCare |
| Skechers USA |
Addus HomeCare and Skechers USA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Addus HomeCare and Skechers USA
The main advantage of trading using opposite Addus HomeCare and Skechers USA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Addus HomeCare position performs unexpectedly, Skechers USA 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 Skechers USA will offset losses from the drop in Skechers USA's long position.| Addus HomeCare vs. Select Medical Holdings | Addus HomeCare vs. Encompass Health Corp | Addus HomeCare vs. Pennant Group | Addus HomeCare vs. InnovAge Holding Corp |
| Skechers USA vs. Designer Brands | Skechers USA vs. Steven Madden | Skechers USA vs. Weyco Group | Skechers USA vs. Rocky Brands |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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