Correlation Between Addus HomeCare and Fortune Brands

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

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

Diversification Opportunities for Addus HomeCare and Fortune Brands

-0.24

Correlation Coefficient

Addus HomeCare  Fortune Brands

Very good diversification

The 3 months correlation between Addus and Fortune is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Addus HomeCare and Fortune Brands Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortune Brands Home 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 Fortune Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortune Brands Home has no effect on the direction of Addus HomeCare i.e., Addus HomeCare and Fortune Brands go up and down completely randomly.

Pair Corralation between Addus HomeCare and Fortune Brands

Assuming the 90 days horizon Addus HomeCare is expected to generate 0.66 times more return on investment than Fortune Brands. However, Addus HomeCare is 1.5 times less risky than Fortune Brands. It trades about 0.08 of its potential returns per unit of risk. Fortune Brands Home is currently generating about 0.02 per unit of risk. If you would invest  8,550  in Addus HomeCare on April 23, 2025 and sell it today you would earn a total of  750.00  from holding Addus HomeCare or generate 8.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Addus HomeCare  vs.  Fortune Brands Home

Addus HomeCare

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Addus HomeCare are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Addus HomeCare may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Fortune Brands Home

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fortune Brands Home are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental drivers, Fortune Brands is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Addus HomeCare and Fortune Brands

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

The idea behind Addus HomeCare and Fortune Brands Home 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.