Correlation Between Addus HomeCare and Stagwell
Can any of the company-specific risk be diversified away by investing in both Addus HomeCare and Stagwell 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 Stagwell into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Addus HomeCare and Stagwell, you can compare the effects of market volatilities on Addus HomeCare and Stagwell 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 Stagwell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Addus HomeCare and Stagwell.
Diversification Opportunities for Addus HomeCare and Stagwell
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Addus and Stagwell is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Addus HomeCare and Stagwell in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stagwell 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 Stagwell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stagwell has no effect on the direction of Addus HomeCare i.e., Addus HomeCare and Stagwell go up and down completely randomly.
Pair Corralation between Addus HomeCare and Stagwell
Given the investment horizon of 90 days Addus HomeCare is expected to under-perform the Stagwell. But the stock apears to be less risky and, when comparing its historical volatility, Addus HomeCare is 1.15 times less risky than Stagwell. The stock trades about -0.6 of its potential returns per unit of risk. The Stagwell is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 640.00 in Stagwell on November 29, 2024 and sell it today you would earn a total of 33.00 from holding Stagwell or generate 5.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Addus HomeCare vs. Stagwell
Performance |
| Timeline |
| Addus HomeCare |
| Stagwell |
Addus HomeCare and Stagwell Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Addus HomeCare and Stagwell
The main advantage of trading using opposite Addus HomeCare and Stagwell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Addus HomeCare position performs unexpectedly, Stagwell 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 Stagwell will offset losses from the drop in Stagwell's long position.| Addus HomeCare vs. Humana Inc | Addus HomeCare vs. Cigna Corp | Addus HomeCare vs. Elevance Health | Addus HomeCare vs. Centene Corp |
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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