Correlation Between Apple and ADDUS HOMECARE

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

By analyzing existing cross correlation between Apple Inc and ADDUS HOMECARE, you can compare the effects of market volatilities on Apple and ADDUS HOMECARE 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 Apple with a short position of ADDUS HOMECARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and ADDUS HOMECARE.

Diversification Opportunities for Apple and ADDUS HOMECARE

0.25

Correlation Coefficient

Apple  ADDUS HOMECARE

Modest diversification

The 3 months correlation between Apple and ADDUS is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and ADDUS HOMECARE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADDUS HOMECARE and Apple 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 Apple Inc are associated (or correlated) with ADDUS HOMECARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADDUS HOMECARE has no effect on the direction of Apple i.e., Apple and ADDUS HOMECARE go up and down completely randomly.

Pair Corralation between Apple and ADDUS HOMECARE

Assuming the 90 days trading horizon Apple Inc is expected to under-perform the ADDUS HOMECARE. In addition to that, Apple is 1.19 times more volatile than ADDUS HOMECARE. It trades about -0.47 of its total potential returns per unit of risk. ADDUS HOMECARE is currently generating about 0.14 per unit of volatility. If you would invest  12,300  in ADDUS HOMECARE on October 25, 2024 and sell it today you would earn a total of  400.00  from holding ADDUS HOMECARE or generate 3.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Apple Inc  vs.  ADDUS HOMECARE

Apple Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apple Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Apple is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

ADDUS HOMECARE

Risk-Adjusted Performance

5 of 100

Modest

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

Pair Trading with Apple and ADDUS HOMECARE

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

The idea behind Apple Inc and ADDUS HOMECARE 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.

Check out your portfolio center.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.