Correlation Between Addus HomeCare and AmTrust Financial
Can any of the company-specific risk be diversified away by investing in both Addus HomeCare and AmTrust Financial 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 AmTrust Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Addus HomeCare and AmTrust Financial Services, you can compare the effects of market volatilities on Addus HomeCare and AmTrust Financial 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 AmTrust Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Addus HomeCare and AmTrust Financial.
Diversification Opportunities for Addus HomeCare and AmTrust Financial
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Addus and AmTrust is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Addus HomeCare and AmTrust Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AmTrust Financial 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 AmTrust Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AmTrust Financial has no effect on the direction of Addus HomeCare i.e., Addus HomeCare and AmTrust Financial go up and down completely randomly.
Pair Corralation between Addus HomeCare and AmTrust Financial
Given the investment horizon of 90 days Addus HomeCare is expected to generate 0.52 times more return on investment than AmTrust Financial. However, Addus HomeCare is 1.93 times less risky than AmTrust Financial. It trades about 0.21 of its potential returns per unit of risk. AmTrust Financial Services is currently generating about -0.05 per unit of risk. If you would invest 12,295 in Addus HomeCare on September 24, 2024 and sell it today you would earn a total of 845.00 from holding Addus HomeCare or generate 6.87% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Addus HomeCare vs. AmTrust Financial Services
Performance |
Timeline |
Addus HomeCare |
AmTrust Financial |
Addus HomeCare and AmTrust Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Addus HomeCare and AmTrust Financial
The main advantage of trading using opposite Addus HomeCare and AmTrust Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Addus HomeCare position performs unexpectedly, AmTrust Financial 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 AmTrust Financial will offset losses from the drop in AmTrust Financial's long position.Addus HomeCare vs. Cigna Corp | Addus HomeCare vs. Definitive Healthcare Corp | Addus HomeCare vs. Edwards Lifesciences Corp | Addus HomeCare vs. Mednax Inc |
AmTrust Financial vs. AmTrust Financial Services | AmTrust Financial vs. AmTrust Financial Services | AmTrust Financial vs. AmTrust Financial Services | AmTrust Financial vs. AmTrust Financial Services |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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