Correlation Between Great West and Addus HomeCare
Can any of the company-specific risk be diversified away by investing in both Great West 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 Great West and Addus HomeCare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great West Lifeco and Addus HomeCare, you can compare the effects of market volatilities on Great West 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 Great West with a short position of Addus HomeCare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great West and Addus HomeCare.
Diversification Opportunities for Great West and Addus HomeCare
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Great and Addus is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Great West Lifeco and Addus HomeCare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Addus HomeCare and Great West 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 Great West Lifeco 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 Great West i.e., Great West and Addus HomeCare go up and down completely randomly.
Pair Corralation between Great West and Addus HomeCare
Assuming the 90 days horizon Great West Lifeco is expected to under-perform the Addus HomeCare. But the stock apears to be less risky and, when comparing its historical volatility, Great West Lifeco is 2.03 times less risky than Addus HomeCare. The stock trades about -0.06 of its potential returns per unit of risk. The Addus HomeCare is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 12,200 in Addus HomeCare on October 25, 2024 and sell it today you would earn a total of 500.00 from holding Addus HomeCare or generate 4.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
Great West Lifeco vs. Addus HomeCare
Performance |
| Timeline |
| Great West Lifeco |
| Addus HomeCare |
Great West and Addus HomeCare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great West and Addus HomeCare
The main advantage of trading using opposite Great West and Addus HomeCare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great West 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.| Great West vs. PPHE HOTEL GROUP | Great West vs. InterContinental Hotels Group | Great West vs. Salesforce | Great West vs. Wyndham Hotels Resorts |
| Addus HomeCare vs. Fresenius Medical Care | Addus HomeCare vs. Chemed | Addus HomeCare vs. Superior Plus Corp | Addus HomeCare vs. Origin Agritech |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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