Correlation Between ADDUS HOMECARE and Taylor Morrison

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

By analyzing existing cross correlation between ADDUS HOMECARE and Taylor Morrison Home, you can compare the effects of market volatilities on ADDUS HOMECARE and Taylor Morrison 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 Taylor Morrison. Check out your portfolio center. Please also check ongoing floating volatility patterns of ADDUS HOMECARE and Taylor Morrison.

Diversification Opportunities for ADDUS HOMECARE and Taylor Morrison

-0.5

Correlation Coefficient

ADDUS HOMECARE  Taylor Morrison

Very good diversification

The 3 months correlation between ADDUS and Taylor is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding ADDUS HOMECARE and Taylor Morrison Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taylor Morrison 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 Taylor Morrison. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taylor Morrison Home has no effect on the direction of ADDUS HOMECARE i.e., ADDUS HOMECARE and Taylor Morrison go up and down completely randomly.

Pair Corralation between ADDUS HOMECARE and Taylor Morrison

Assuming the 90 days trading horizon ADDUS HOMECARE is expected to under-perform the Taylor Morrison. But the stock apears to be less risky and, when comparing its historical volatility, ADDUS HOMECARE is 1.61 times less risky than Taylor Morrison. The stock trades about -0.05 of its potential returns per unit of risk. The Taylor Morrison Home is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  5,050  in Taylor Morrison Home on May 6, 2025 and sell it today you would earn a total of  250.00  from holding Taylor Morrison Home or generate 4.95% return on investment over 90 days.

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

ADDUS HOMECARE  vs.  Taylor Morrison Home

ADDUS HOMECARE

Risk-Adjusted Performance

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 rather sound basic indicators, ADDUS HOMECARE is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Taylor Morrison Home

Risk-Adjusted Performance

Insignificant

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

Pair Trading with ADDUS HOMECARE and Taylor Morrison

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

The idea behind ADDUS HOMECARE and Taylor Morrison 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..