Correlation Between Monument Mining and Addus HomeCare
Can any of the company-specific risk be diversified away by investing in both Monument Mining and Addus HomeCare 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 Monument Mining and Addus HomeCare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Monument Mining Limited and Addus HomeCare, you can compare the effects of market volatilities on Monument Mining and Addus HomeCare 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 Monument Mining with a short position of Addus HomeCare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monument Mining and Addus HomeCare.
Diversification Opportunities for Monument Mining and Addus HomeCare
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Monument and Addus is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Monument Mining Limited and Addus HomeCare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Addus HomeCare and Monument Mining 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 Monument Mining Limited are associated (or correlated) with Addus HomeCare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Addus HomeCare has no effect on the direction of Monument Mining i.e., Monument Mining and Addus HomeCare go up and down completely randomly.
Pair Corralation between Monument Mining and Addus HomeCare
Assuming the 90 days trading horizon Monument Mining Limited is expected to generate 2.95 times more return on investment than Addus HomeCare. However, Monument Mining is 2.95 times more volatile than Addus HomeCare. It trades about 0.08 of its potential returns per unit of risk. Addus HomeCare is currently generating about 0.04 per unit of risk. If you would invest 19.00 in Monument Mining Limited on October 11, 2024 and sell it today you would earn a total of 2.00 from holding Monument Mining Limited or generate 10.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Monument Mining Limited vs. Addus HomeCare
Performance |
| Timeline |
| Monument Mining |
| Addus HomeCare |
Monument Mining and Addus HomeCare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monument Mining and Addus HomeCare
The main advantage of trading using opposite Monument Mining and Addus HomeCare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monument Mining position performs unexpectedly, Addus HomeCare 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 Addus HomeCare will offset losses from the drop in Addus HomeCare's long position.| Monument Mining vs. BORR DRILLING NEW | Monument Mining vs. ADDUS HOMECARE | Monument Mining vs. PREMIER FOODS | Monument Mining vs. BG Foods |
| Addus HomeCare vs. VITEC SOFTWARE GROUP | Addus HomeCare vs. FIREWEED METALS P | Addus HomeCare vs. GRIFFIN MINING LTD | Addus HomeCare vs. OPERA SOFTWARE |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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