Correlation Between Addus HomeCare and BG Foods
Can any of the company-specific risk be diversified away by investing in both Addus HomeCare and BG Foods 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 BG Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Addus HomeCare and BG Foods, you can compare the effects of market volatilities on Addus HomeCare and BG Foods 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 BG Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Addus HomeCare and BG Foods.
Diversification Opportunities for Addus HomeCare and BG Foods
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Addus and DHR is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Addus HomeCare and BG Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BG Foods 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 BG Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BG Foods has no effect on the direction of Addus HomeCare i.e., Addus HomeCare and BG Foods go up and down completely randomly.
Pair Corralation between Addus HomeCare and BG Foods
Assuming the 90 days horizon Addus HomeCare is expected to generate 1.28 times less return on investment than BG Foods. But when comparing it to its historical volatility, Addus HomeCare is 1.71 times less risky than BG Foods. It trades about 0.17 of its potential returns per unit of risk. BG Foods is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 629.00 in BG Foods on October 3, 2024 and sell it today you would earn a total of 40.00 from holding BG Foods or generate 6.36% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Addus HomeCare vs. BG Foods
Performance |
Timeline |
Addus HomeCare |
BG Foods |
Addus HomeCare and BG Foods Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Addus HomeCare and BG Foods
The main advantage of trading using opposite Addus HomeCare and BG Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Addus HomeCare position performs unexpectedly, BG Foods 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 BG Foods will offset losses from the drop in BG Foods' long position.Addus HomeCare vs. Ramsay Health Care | Addus HomeCare vs. NMI Holdings | Addus HomeCare vs. SIVERS SEMICONDUCTORS AB | Addus HomeCare vs. Talanx AG |
BG Foods vs. Kingdee International Software | BG Foods vs. Check Point Software | BG Foods vs. PKSHA TECHNOLOGY INC | BG Foods vs. CEOTRONICS |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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