Correlation Between Addus HomeCare and SL Green
Can any of the company-specific risk be diversified away by investing in both Addus HomeCare and SL Green 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 SL Green into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Addus HomeCare and SL Green Realty, you can compare the effects of market volatilities on Addus HomeCare and SL Green 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 SL Green. Check out your portfolio center. Please also check ongoing floating volatility patterns of Addus HomeCare and SL Green.
Diversification Opportunities for Addus HomeCare and SL Green
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Addus and SLG is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Addus HomeCare and SL Green Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SL Green Realty 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 SL Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SL Green Realty has no effect on the direction of Addus HomeCare i.e., Addus HomeCare and SL Green go up and down completely randomly.
Pair Corralation between Addus HomeCare and SL Green
Given the investment horizon of 90 days Addus HomeCare is expected to generate 4.21 times less return on investment than SL Green. But when comparing it to its historical volatility, Addus HomeCare is 1.3 times less risky than SL Green. It trades about 0.06 of its potential returns per unit of risk. SL Green Realty is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 4,900 in SL Green Realty on August 25, 2024 and sell it today you would earn a total of 3,063 from holding SL Green Realty or generate 62.51% 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. SL Green Realty
Performance |
| Timeline |
| Addus HomeCare |
| SL Green Realty |
Addus HomeCare and SL Green Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Addus HomeCare and SL Green
The main advantage of trading using opposite Addus HomeCare and SL Green positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Addus HomeCare position performs unexpectedly, SL Green 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 SL Green will offset losses from the drop in SL Green's long position.The idea behind Addus HomeCare and SL Green Realty pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| SL Green vs. Boston Properties | SL Green vs. Alexandria Real Estate | SL Green vs. Vornado Realty Trust | SL Green vs. Highwoods Properties |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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