Correlation Between Addus HomeCare and Inspire Medical

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

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

Diversification Opportunities for Addus HomeCare and Inspire Medical

-0.21

Correlation Coefficient

Addus HomeCare  Inspire Medical

Very good diversification

The 3 months correlation between Addus and Inspire is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Addus HomeCare and Inspire Medical Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inspire Medical Systems 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 Inspire Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inspire Medical Systems has no effect on the direction of Addus HomeCare i.e., Addus HomeCare and Inspire Medical go up and down completely randomly.

Pair Corralation between Addus HomeCare and Inspire Medical

Given the investment horizon of 90 days Addus HomeCare is expected to under-perform the Inspire Medical. But the stock apears to be less risky and, when comparing its historical volatility, Addus HomeCare is 2.58 times less risky than Inspire Medical. The stock trades about 0.0 of its potential returns per unit of risk. The Inspire Medical Systems is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  9,175  in Inspire Medical Systems on August 26, 2025 and sell it today you would earn a total of  2,308  from holding Inspire Medical Systems or generate 25.16% 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.  Inspire Medical Systems

Addus HomeCare

Risk-Adjusted Performance

Weakest

Over the last 90 days Addus HomeCare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Addus HomeCare is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Inspire Medical Systems

Risk-Adjusted Performance

Weakest

Compared to the overall equity markets, risk-adjusted returns on investments in Inspire Medical Systems are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Inspire Medical reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Addus HomeCare and Inspire Medical

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

The idea behind Addus HomeCare and Inspire Medical Systems 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.