Correlation Between ELECTRONIC ARTS and Addus HomeCare
Can any of the company-specific risk be diversified away by investing in both ELECTRONIC ARTS 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 ELECTRONIC ARTS and Addus HomeCare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ELECTRONIC ARTS and Addus HomeCare, you can compare the effects of market volatilities on ELECTRONIC ARTS 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 ELECTRONIC ARTS with a short position of Addus HomeCare. Check out your portfolio center. Please also check ongoing floating volatility patterns of ELECTRONIC ARTS and Addus HomeCare.
Diversification Opportunities for ELECTRONIC ARTS and Addus HomeCare
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ELECTRONIC and Addus is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding ELECTRONIC ARTS and Addus HomeCare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Addus HomeCare and ELECTRONIC ARTS 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 ELECTRONIC ARTS 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 ELECTRONIC ARTS i.e., ELECTRONIC ARTS and Addus HomeCare go up and down completely randomly.
Pair Corralation between ELECTRONIC ARTS and Addus HomeCare
Assuming the 90 days trading horizon ELECTRONIC ARTS is expected to generate 1.06 times less return on investment than Addus HomeCare. But when comparing it to its historical volatility, ELECTRONIC ARTS is 1.71 times less risky than Addus HomeCare. It trades about 0.05 of its potential returns per unit of risk. Addus HomeCare is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 9,250 in Addus HomeCare on September 18, 2024 and sell it today you would earn a total of 2,150 from holding Addus HomeCare or generate 23.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ELECTRONIC ARTS vs. Addus HomeCare
Performance |
| Timeline |
| ELECTRONIC ARTS |
| Addus HomeCare |
ELECTRONIC ARTS and Addus HomeCare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ELECTRONIC ARTS and Addus HomeCare
The main advantage of trading using opposite ELECTRONIC ARTS and Addus HomeCare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ELECTRONIC ARTS 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.| ELECTRONIC ARTS vs. Apple Inc | ELECTRONIC ARTS vs. Apple Inc | ELECTRONIC ARTS vs. Apple Inc | ELECTRONIC ARTS vs. Apple Inc |
| Addus HomeCare vs. Ramsay Health Care | Addus HomeCare vs. Universal Health Services | Addus HomeCare vs. Superior Plus Corp | Addus HomeCare vs. SIVERS SEMICONDUCTORS AB |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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