Correlation Between ADDUS HOMECARE and Macys

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

By analyzing existing cross correlation between ADDUS HOMECARE and Macys Inc, you can compare the effects of market volatilities on ADDUS HOMECARE and Macys 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 Macys. Check out your portfolio center. Please also check ongoing floating volatility patterns of ADDUS HOMECARE and Macys.

Diversification Opportunities for ADDUS HOMECARE and Macys

-0.08

Correlation Coefficient

ADDUS HOMECARE  Macys

Good diversification

The 3 months correlation between ADDUS and Macys is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding ADDUS HOMECARE and Macys Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macys Inc 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 Macys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macys Inc has no effect on the direction of ADDUS HOMECARE i.e., ADDUS HOMECARE and Macys go up and down completely randomly.

Pair Corralation between ADDUS HOMECARE and Macys

Assuming the 90 days trading horizon ADDUS HOMECARE is expected to generate 0.6 times more return on investment than Macys. However, ADDUS HOMECARE is 1.66 times less risky than Macys. It trades about 0.03 of its potential returns per unit of risk. Macys Inc is currently generating about -0.3 per unit of risk. If you would invest  12,300  in ADDUS HOMECARE on October 27, 2024 and sell it today you would earn a total of  100.00  from holding ADDUS HOMECARE or generate 0.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

ADDUS HOMECARE  vs.  Macys Inc

ADDUS HOMECARE

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ADDUS HOMECARE are ranked lower than 3 (%) 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.

Macys Inc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Macys Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Macys is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ADDUS HOMECARE and Macys

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

The idea behind ADDUS HOMECARE and Macys Inc 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.