Correlation Between Addus HomeCare and Wyndham

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

By analyzing existing cross correlation between Addus HomeCare and Wyndham Destinations 4625, you can compare the effects of market volatilities on Addus HomeCare and Wyndham 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 Wyndham. Check out your portfolio center. Please also check ongoing floating volatility patterns of Addus HomeCare and Wyndham.

Diversification Opportunities for Addus HomeCare and Wyndham

0.38

Correlation Coefficient

Addus HomeCare  Wyndham

Weak diversification

The 3 months correlation between Addus and Wyndham is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Addus HomeCare and Wyndham Destinations 4625 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wyndham Destinations 4625 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 Wyndham. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wyndham Destinations 4625 has no effect on the direction of Addus HomeCare i.e., Addus HomeCare and Wyndham go up and down completely randomly.

Pair Corralation between Addus HomeCare and Wyndham

Given the investment horizon of 90 days Addus HomeCare is expected to under-perform the Wyndham. In addition to that, Addus HomeCare is 1.65 times more volatile than Wyndham Destinations 4625. It trades about -0.28 of its total potential returns per unit of risk. Wyndham Destinations 4625 is currently generating about -0.14 per unit of volatility. If you would invest  9,307  in Wyndham Destinations 4625 on December 23, 2024 and sell it today you would lose (869.00) from holding Wyndham Destinations 4625 or give up 9.34% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	88.52%
Values	Daily Returns

Addus HomeCare  vs.  Wyndham Destinations 4625

Addus HomeCare

Risk-Adjusted Performance

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 unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Wyndham Destinations 4625

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wyndham Destinations 4625 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for Wyndham Destinations 4625 investors.

Pair Trading with Addus HomeCare and Wyndham

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

The idea behind Addus HomeCare and Wyndham Destinations 4625 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.