Correlation Between KEURIG and Addus HomeCare

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

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

Diversification Opportunities for KEURIG and Addus HomeCare

-0.02

Correlation Coefficient

KEURIG  Addus HomeCare

Good diversification

The 3 months correlation between KEURIG and Addus is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding KEURIG DR PEPPER and Addus HomeCare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Addus HomeCare and KEURIG 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 KEURIG DR PEPPER 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 KEURIG i.e., KEURIG and Addus HomeCare go up and down completely randomly.

Pair Corralation between KEURIG and Addus HomeCare

Assuming the 90 days trading horizon KEURIG DR PEPPER is expected to generate 51.96 times more return on investment than Addus HomeCare. However, KEURIG is 51.96 times more volatile than Addus HomeCare. It trades about 0.1 of its potential returns per unit of risk. Addus HomeCare is currently generating about 0.03 per unit of risk. If you would invest  8,181  in KEURIG DR PEPPER on October 7, 2024 and sell it today you would lose (611.00) from holding KEURIG DR PEPPER or give up 7.47% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	81.45%
Values	Daily Returns

KEURIG DR PEPPER  vs.  Addus HomeCare

KEURIG DR PEPPER

Risk-Adjusted Performance

0 of 100

Very Weak

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

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.

Pair Trading with KEURIG and Addus HomeCare

The main advantage of trading using opposite KEURIG and Addus HomeCare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KEURIG 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 KEURIG DR PEPPER 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.

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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.