Correlation Between Addus HomeCare and Envista Holdings

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

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

Diversification Opportunities for Addus HomeCare and Envista Holdings

-0.59

Correlation Coefficient

Addus HomeCare  Envista Holdings

Excellent diversification

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

Pair Corralation between Addus HomeCare and Envista Holdings

Given the investment horizon of 90 days Addus HomeCare is expected to generate 0.73 times more return on investment than Envista Holdings. However, Addus HomeCare is 1.37 times less risky than Envista Holdings. It trades about 0.09 of its potential returns per unit of risk. Envista Holdings Corp is currently generating about -0.02 per unit of risk. If you would invest  8,949  in Addus HomeCare on October 9, 2024 and sell it today you would earn a total of  3,621  from holding Addus HomeCare or generate 40.46% 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.  Envista Holdings Corp

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.

Envista Holdings Corp

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Envista Holdings Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Envista Holdings may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Addus HomeCare and Envista Holdings

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

The idea behind Addus HomeCare and Envista Holdings Corp 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.