Correlation Between Addus HomeCare and QuinStreet

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

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

Diversification Opportunities for Addus HomeCare and QuinStreet

-0.29

Correlation Coefficient

Addus HomeCare  QuinStreet

Very good diversification

The 3 months correlation between Addus and QuinStreet is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Addus HomeCare and QuinStreet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QuinStreet 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 QuinStreet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QuinStreet has no effect on the direction of Addus HomeCare i.e., Addus HomeCare and QuinStreet go up and down completely randomly.

Pair Corralation between Addus HomeCare and QuinStreet

Given the investment horizon of 90 days Addus HomeCare is expected to generate 1.83 times less return on investment than QuinStreet. But when comparing it to its historical volatility, Addus HomeCare is 1.5 times less risky than QuinStreet. It trades about 0.03 of its potential returns per unit of risk. QuinStreet is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,584  in QuinStreet on October 24, 2024 and sell it today you would earn a total of  662.00  from holding QuinStreet or generate 41.79% 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.  QuinStreet

Addus HomeCare

Risk-Adjusted Performance

3 of 100

Insignificant

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 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.

QuinStreet

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in QuinStreet are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, QuinStreet unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Addus HomeCare and QuinStreet

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

The idea behind Addus HomeCare and QuinStreet 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.