Correlation Between ADDUS HOMECARE and JPMorgan Chase

Can any of the company-specific risk be diversified away by investing in both ADDUS HOMECARE and JPMorgan Chase 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 ADDUS HOMECARE and JPMorgan Chase into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ADDUS HOMECARE and JPMorgan Chase Co, you can compare the effects of market volatilities on ADDUS HOMECARE and JPMorgan Chase 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 ADDUS HOMECARE with a short position of JPMorgan Chase. Check out your portfolio center. Please also check ongoing floating volatility patterns of ADDUS HOMECARE and JPMorgan Chase.

Diversification Opportunities for ADDUS HOMECARE and JPMorgan Chase

-0.23

Correlation Coefficient

ADDUS HOMECARE  JPMorgan Chase

Very good diversification

The 3 months correlation between ADDUS and JPMorgan is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding ADDUS HOMECARE and JPMorgan Chase Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Chase and ADDUS HOMECARE 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 ADDUS HOMECARE are associated (or correlated) with JPMorgan Chase. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Chase has no effect on the direction of ADDUS HOMECARE i.e., ADDUS HOMECARE and JPMorgan Chase go up and down completely randomly.

Pair Corralation between ADDUS HOMECARE and JPMorgan Chase

Assuming the 90 days trading horizon ADDUS HOMECARE is expected to generate 1.47 times more return on investment than JPMorgan Chase. However, ADDUS HOMECARE is 1.47 times more volatile than JPMorgan Chase Co. It trades about 0.2 of its potential returns per unit of risk. JPMorgan Chase Co is currently generating about 0.1 per unit of risk. If you would invest  11,600  in ADDUS HOMECARE on October 11, 2024 and sell it today you would earn a total of  600.00  from holding ADDUS HOMECARE or generate 5.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.44%
Values	Daily Returns

ADDUS HOMECARE  vs.  JPMorgan Chase Co

ADDUS HOMECARE

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ADDUS HOMECARE are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, ADDUS HOMECARE is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

JPMorgan Chase

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Chase Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, JPMorgan Chase reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ADDUS HOMECARE and JPMorgan Chase

The main advantage of trading using opposite ADDUS HOMECARE and JPMorgan Chase positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ADDUS HOMECARE position performs unexpectedly, JPMorgan Chase 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 JPMorgan Chase will offset losses from the drop in JPMorgan Chase's long position.

The idea behind ADDUS HOMECARE and JPMorgan Chase Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..