Correlation Between Addus HomeCare and Apogee Enterprises

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

By analyzing existing cross correlation between Addus HomeCare and Apogee Enterprises, you can compare the effects of market volatilities on Addus HomeCare and Apogee Enterprises 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 Apogee Enterprises. Check out your portfolio center. Please also check ongoing floating volatility patterns of Addus HomeCare and Apogee Enterprises.

Diversification Opportunities for Addus HomeCare and Apogee Enterprises

-0.59

Correlation Coefficient

Addus HomeCare  Apogee Enterprises

Excellent diversification

The 3 months correlation between Addus and Apogee is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Addus HomeCare and Apogee Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apogee Enterprises 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 Apogee Enterprises. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apogee Enterprises has no effect on the direction of Addus HomeCare i.e., Addus HomeCare and Apogee Enterprises go up and down completely randomly.

Pair Corralation between Addus HomeCare and Apogee Enterprises

Given the investment horizon of 90 days Addus HomeCare is expected to generate 1.1 times more return on investment than Apogee Enterprises. However, Addus HomeCare is 1.1 times more volatile than Apogee Enterprises. It trades about 0.23 of its potential returns per unit of risk. Apogee Enterprises is currently generating about -0.46 per unit of risk. If you would invest  12,129  in Addus HomeCare on September 28, 2024 and sell it today you would earn a total of  889.00  from holding Addus HomeCare or generate 7.33% return on investment over 90 days.

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

Addus HomeCare  vs.  Apogee Enterprises

Addus HomeCare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Addus HomeCare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Addus HomeCare is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Apogee Enterprises

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Apogee Enterprises are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Apogee Enterprises may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Addus HomeCare and Apogee Enterprises

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

The idea behind Addus HomeCare and Apogee Enterprises 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.