Correlation Between Dream Homes and Addus HomeCare
Can any of the company-specific risk be diversified away by investing in both Dream Homes 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 Dream Homes and Addus HomeCare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dream Homes Development and Addus HomeCare, you can compare the effects of market volatilities on Dream Homes 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 Dream Homes with a short position of Addus HomeCare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dream Homes and Addus HomeCare.
Diversification Opportunities for Dream Homes and Addus HomeCare
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dream and Addus is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Dream Homes Development and Addus HomeCare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Addus HomeCare and Dream Homes 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 Dream Homes Development 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 Dream Homes i.e., Dream Homes and Addus HomeCare go up and down completely randomly.
Pair Corralation between Dream Homes and Addus HomeCare
Given the investment horizon of 90 days Dream Homes Development is expected to generate 62.89 times more return on investment than Addus HomeCare. However, Dream Homes is 62.89 times more volatile than Addus HomeCare. It trades about 0.19 of its potential returns per unit of risk. Addus HomeCare is currently generating about -0.07 per unit of risk. If you would invest 1.20 in Dream Homes Development on August 31, 2024 and sell it today you would earn a total of 3.10 from holding Dream Homes Development or generate 258.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dream Homes Development vs. Addus HomeCare
Performance |
| Timeline |
| Dream Homes Development |
| Addus HomeCare |
Dream Homes and Addus HomeCare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dream Homes and Addus HomeCare
The main advantage of trading using opposite Dream Homes and Addus HomeCare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dream Homes 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.| Dream Homes vs. Greystone Logistics | Dream Homes vs. Mill City Ventures | Dream Homes vs. Black Diamond Group | Dream Homes vs. HUMANA INC |
| 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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