Correlation Between Addus HomeCare and RBACN

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

By analyzing existing cross correlation between Addus HomeCare and RBACN 775 15 MAR 31, you can compare the effects of market volatilities on Addus HomeCare and RBACN 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 RBACN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Addus HomeCare and RBACN.

Diversification Opportunities for Addus HomeCare and RBACN

0.1

Correlation Coefficient

Addus HomeCare  RBACN

Average diversification

The 3 months correlation between Addus and RBACN is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Addus HomeCare and RBACN 775 15 MAR 31 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBACN 775 15 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 RBACN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RBACN 775 15 has no effect on the direction of Addus HomeCare i.e., Addus HomeCare and RBACN go up and down completely randomly.

Pair Corralation between Addus HomeCare and RBACN

Given the investment horizon of 90 days Addus HomeCare is expected to generate 8.45 times more return on investment than RBACN. However, Addus HomeCare is 8.45 times more volatile than RBACN 775 15 MAR 31. It trades about 0.23 of its potential returns per unit of risk. RBACN 775 15 MAR 31 is currently generating about -0.25 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 Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Addus HomeCare  vs.  RBACN 775 15 MAR 31

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.

RBACN 775 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RBACN 775 15 MAR 31 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, RBACN is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Addus HomeCare and RBACN

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

The idea behind Addus HomeCare and RBACN 775 15 MAR 31 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.