Correlation Between HomeToGo and Addus HomeCare
Can any of the company-specific risk be diversified away by investing in both HomeToGo 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 HomeToGo and Addus HomeCare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HomeToGo SE and Addus HomeCare, you can compare the effects of market volatilities on HomeToGo 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 HomeToGo with a short position of Addus HomeCare. Check out your portfolio center. Please also check ongoing floating volatility patterns of HomeToGo and Addus HomeCare.
Diversification Opportunities for HomeToGo and Addus HomeCare
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between HomeToGo and Addus is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding HomeToGo SE and Addus HomeCare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Addus HomeCare and HomeToGo 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 HomeToGo SE 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 HomeToGo i.e., HomeToGo and Addus HomeCare go up and down completely randomly.
Pair Corralation between HomeToGo and Addus HomeCare
Assuming the 90 days trading horizon HomeToGo SE is expected to under-perform the Addus HomeCare. In addition to that, HomeToGo is 1.13 times more volatile than Addus HomeCare. It trades about -0.06 of its total potential returns per unit of risk. Addus HomeCare is currently generating about 0.03 per unit of volatility. If you would invest 11,200 in Addus HomeCare on September 1, 2024 and sell it today you would earn a total of 100.00 from holding Addus HomeCare or generate 0.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HomeToGo SE vs. Addus HomeCare
Performance |
| Timeline |
| HomeToGo SE |
| Addus HomeCare |
HomeToGo and Addus HomeCare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HomeToGo and Addus HomeCare
The main advantage of trading using opposite HomeToGo and Addus HomeCare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HomeToGo 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.| HomeToGo vs. Alphabet Class A | HomeToGo vs. Alphabet Class A | HomeToGo vs. Meta Platforms | HomeToGo vs. Tencent Holdings |
| Addus HomeCare vs. Richter Gedeon Vegyszeti | Addus HomeCare vs. Charoen Pokphand Foods | 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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