Correlation Between Option Care and Addus HomeCare
Can any of the company-specific risk be diversified away by investing in both Option Care 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 Option Care and Addus HomeCare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Option Care Health and Addus HomeCare, you can compare the effects of market volatilities on Option Care 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 Option Care with a short position of Addus HomeCare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Option Care and Addus HomeCare.
Diversification Opportunities for Option Care and Addus HomeCare
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Option and Addus is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Option Care Health and Addus HomeCare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Addus HomeCare and Option Care 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 Option Care Health 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 Option Care i.e., Option Care and Addus HomeCare go up and down completely randomly.
Pair Corralation between Option Care and Addus HomeCare
Given the investment horizon of 90 days Option Care Health is expected to under-perform the Addus HomeCare. In addition to that, Option Care is 2.64 times more volatile than Addus HomeCare. It trades about -0.18 of its total potential returns per unit of risk. Addus HomeCare is currently generating about -0.08 per unit of volatility. If you would invest 12,829 in Addus HomeCare on August 27, 2024 and sell it today you would lose (534.00) from holding Addus HomeCare or give up 4.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Option Care Health vs. Addus HomeCare
Performance |
| Timeline |
| Option Care Health |
| Addus HomeCare |
Option Care and Addus HomeCare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Option Care and Addus HomeCare
The main advantage of trading using opposite Option Care and Addus HomeCare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Option Care 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.| Option Care vs. Addus HomeCare | Option Care vs. Acadia Healthcare | Option Care vs. Encompass Health Corp | Option Care vs. Select Medical Holdings |
| 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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