Correlation Between Addus HomeCare and Software Acquisition
Can any of the company-specific risk be diversified away by investing in both Addus HomeCare and Software Acquisition 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 Software Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Addus HomeCare and Software Acquisition Group, you can compare the effects of market volatilities on Addus HomeCare and Software Acquisition 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 Software Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Addus HomeCare and Software Acquisition.
Diversification Opportunities for Addus HomeCare and Software Acquisition
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Addus and Software is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Addus HomeCare and Software Acquisition Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Software Acquisition 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 Software Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Software Acquisition has no effect on the direction of Addus HomeCare i.e., Addus HomeCare and Software Acquisition go up and down completely randomly.
Pair Corralation between Addus HomeCare and Software Acquisition
Given the investment horizon of 90 days Addus HomeCare is expected to generate 6.76 times less return on investment than Software Acquisition. But when comparing it to its historical volatility, Addus HomeCare is 2.15 times less risky than Software Acquisition. It trades about 0.05 of its potential returns per unit of risk. Software Acquisition Group is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 121.00 in Software Acquisition Group on May 21, 2025 and sell it today you would earn a total of 52.00 from holding Software Acquisition Group or generate 42.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Addus HomeCare vs. Software Acquisition Group
Performance |
| Timeline |
| Addus HomeCare |
| Software Acquisition |
Addus HomeCare and Software Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Addus HomeCare and Software Acquisition
The main advantage of trading using opposite Addus HomeCare and Software Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Addus HomeCare position performs unexpectedly, Software Acquisition 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 Software Acquisition will offset losses from the drop in Software Acquisition's long position.| Addus HomeCare vs. Encompass Health Corp | Addus HomeCare vs. Pennant Group | Addus HomeCare vs. Acadia Healthcare | Addus HomeCare vs. Select Medical Holdings |
| Software Acquisition vs. Comstock Holding Companies | Software Acquisition vs. Boyd Gaming | Software Acquisition vs. Biglari Holdings | Software Acquisition vs. Shenzhen Investment Holdings |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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