Correlation Between Entravision Communications and Addus HomeCare

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

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

Diversification Opportunities for Entravision Communications and Addus HomeCare

0.34

Correlation Coefficient

Entravision Communications  Addus HomeCare

Weak diversification

The 3 months correlation between Entravision and Addus is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Entravision Communications and Addus HomeCare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Addus HomeCare and Entravision Communications 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 Entravision Communications 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 Entravision Communications i.e., Entravision Communications and Addus HomeCare go up and down completely randomly.

Pair Corralation between Entravision Communications and Addus HomeCare

Assuming the 90 days horizon Entravision Communications is expected to generate 2.18 times more return on investment than Addus HomeCare. However, Entravision Communications is 2.18 times more volatile than Addus HomeCare. It trades about 0.11 of its potential returns per unit of risk. Addus HomeCare is currently generating about 0.09 per unit of risk. If you would invest  166.00  in Entravision Communications on April 3, 2025 and sell it today you would earn a total of  26.00  from holding Entravision Communications or generate 15.66% return on investment over 90 days.

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

Entravision Communications  vs.  Addus HomeCare

Entravision Communications

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Entravision Communications are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Entravision Communications may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Addus HomeCare

Risk-Adjusted Performance

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. Despite nearly fragile basic indicators, Addus HomeCare may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Entravision Communications and Addus HomeCare

The main advantage of trading using opposite Entravision Communications and Addus HomeCare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Entravision Communications 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 Entravision Communications 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.