Correlation Between Addus HomeCare and Toro
Can any of the company-specific risk be diversified away by investing in both Addus HomeCare and Toro 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 Toro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Addus HomeCare and Toro Co, you can compare the effects of market volatilities on Addus HomeCare and Toro 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 Toro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Addus HomeCare and Toro.
Diversification Opportunities for Addus HomeCare and Toro
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Addus and Toro is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Addus HomeCare and Toro Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toro 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 Toro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toro has no effect on the direction of Addus HomeCare i.e., Addus HomeCare and Toro go up and down completely randomly.
Pair Corralation between Addus HomeCare and Toro
Given the investment horizon of 90 days Addus HomeCare is expected to generate 0.89 times more return on investment than Toro. However, Addus HomeCare is 1.13 times less risky than Toro. It trades about 0.08 of its potential returns per unit of risk. Toro Co is currently generating about 0.02 per unit of risk. If you would invest 8,935 in Addus HomeCare on September 2, 2024 and sell it today you would earn a total of 3,349 from holding Addus HomeCare or generate 37.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Addus HomeCare vs. Toro Co
Performance |
| Timeline |
| Addus HomeCare |
| Toro |
Addus HomeCare and Toro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Addus HomeCare and Toro
The main advantage of trading using opposite Addus HomeCare and Toro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Addus HomeCare position performs unexpectedly, Toro 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 Toro will offset losses from the drop in Toro'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 |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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