Correlation Between Addus HomeCare and CaliberCos

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

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

Diversification Opportunities for Addus HomeCare and CaliberCos

0.5

Correlation Coefficient

Addus HomeCare  CaliberCos

Very weak diversification

The 3 months correlation between Addus and CaliberCos is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Addus HomeCare and CaliberCos Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CaliberCos Class A 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 CaliberCos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CaliberCos Class A has no effect on the direction of Addus HomeCare i.e., Addus HomeCare and CaliberCos go up and down completely randomly.

Pair Corralation between Addus HomeCare and CaliberCos

Given the investment horizon of 90 days Addus HomeCare is expected to generate 0.4 times more return on investment than CaliberCos. However, Addus HomeCare is 2.51 times less risky than CaliberCos. It trades about 0.03 of its potential returns per unit of risk. CaliberCos Class A is currently generating about -0.07 per unit of risk. If you would invest  10,699  in Addus HomeCare on October 10, 2024 and sell it today you would earn a total of  1,871  from holding Addus HomeCare or generate 17.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	83.43%
Values	Daily Returns

Addus HomeCare  vs.  CaliberCos Class A

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.

CaliberCos Class A

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CaliberCos Class A are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, CaliberCos exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Addus HomeCare and CaliberCos

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

The idea behind Addus HomeCare and CaliberCos Class A 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..