Correlation Between Freedom Bank and Addus HomeCare
Can any of the company-specific risk be diversified away by investing in both Freedom Bank 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 Freedom Bank and Addus HomeCare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Freedom Bank of and Addus HomeCare, you can compare the effects of market volatilities on Freedom Bank 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 Freedom Bank with a short position of Addus HomeCare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freedom Bank and Addus HomeCare.
Diversification Opportunities for Freedom Bank and Addus HomeCare
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Freedom and Addus is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Freedom Bank of and Addus HomeCare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Addus HomeCare and Freedom Bank 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 Freedom Bank of 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 Freedom Bank i.e., Freedom Bank and Addus HomeCare go up and down completely randomly.
Pair Corralation between Freedom Bank and Addus HomeCare
Given the investment horizon of 90 days Freedom Bank of is expected to generate 0.26 times more return on investment than Addus HomeCare. However, Freedom Bank of is 3.88 times less risky than Addus HomeCare. It trades about 0.3 of its potential returns per unit of risk. Addus HomeCare is currently generating about -0.4 per unit of risk. If you would invest 1,027 in Freedom Bank of on November 18, 2024 and sell it today you would earn a total of 33.00 from holding Freedom Bank of or generate 3.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Freedom Bank of vs. Addus HomeCare
Performance |
| Timeline |
| Freedom Bank |
| Addus HomeCare |
Freedom Bank and Addus HomeCare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Freedom Bank and Addus HomeCare
The main advantage of trading using opposite Freedom Bank and Addus HomeCare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freedom Bank 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.| Freedom Bank vs. National Capital Bank | Freedom Bank vs. Community Heritage Financial | Freedom Bank vs. Citizens Financial Corp | Freedom Bank vs. Bank of Idaho |
| 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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