Correlation Between Universal Health and Addus HomeCare
Can any of the company-specific risk be diversified away by investing in both Universal Health 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 Universal Health and Addus HomeCare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Health Services and Addus HomeCare, you can compare the effects of market volatilities on Universal Health 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 Universal Health with a short position of Addus HomeCare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Health and Addus HomeCare.
Diversification Opportunities for Universal Health and Addus HomeCare
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Universal and Addus is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Universal Health Services and Addus HomeCare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Addus HomeCare and Universal Health 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 Universal Health Services 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 Universal Health i.e., Universal Health and Addus HomeCare go up and down completely randomly.
Pair Corralation between Universal Health and Addus HomeCare
Assuming the 90 days horizon Universal Health Services is expected to under-perform the Addus HomeCare. But the stock apears to be less risky and, when comparing its historical volatility, Universal Health Services is 1.09 times less risky than Addus HomeCare. The stock trades about -0.25 of its potential returns per unit of risk. The Addus HomeCare is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest 11,800 in Addus HomeCare on September 13, 2024 and sell it today you would lose (600.00) from holding Addus HomeCare or give up 5.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Health Services vs. Addus HomeCare
Performance |
| Timeline |
| Universal Health Services |
| Addus HomeCare |
Universal Health and Addus HomeCare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Health and Addus HomeCare
The main advantage of trading using opposite Universal Health and Addus HomeCare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Health 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.| Universal Health vs. NORWEGIAN AIR SHUT | Universal Health vs. MOVIE GAMES SA | Universal Health vs. RCM TECHNOLOGIES | Universal Health vs. WIZZ AIR HLDGUNSPADR4 |
| 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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