Correlation Between FirstCash and Adapthealth Corp

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

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

Diversification Opportunities for FirstCash and Adapthealth Corp

0.13

Correlation Coefficient

FirstCash  Adapthealth Corp

Average diversification

The 3 months correlation between FirstCash and Adapthealth is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding FirstCash and Adapthealth Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adapthealth Corp and FirstCash 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 FirstCash are associated (or correlated) with Adapthealth Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adapthealth Corp has no effect on the direction of FirstCash i.e., FirstCash and Adapthealth Corp go up and down completely randomly.

Pair Corralation between FirstCash and Adapthealth Corp

Given the investment horizon of 90 days FirstCash is expected to under-perform the Adapthealth Corp. But the stock apears to be less risky and, when comparing its historical volatility, FirstCash is 1.36 times less risky than Adapthealth Corp. The stock trades about -0.01 of its potential returns per unit of risk. The Adapthealth Corp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  885.00  in Adapthealth Corp on May 6, 2025 and sell it today you would lose (1.00) from holding Adapthealth Corp or give up 0.11% of portfolio value over 90 days.

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

FirstCash  vs.  Adapthealth Corp

FirstCash

Risk-Adjusted Performance

Very Weak

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

Adapthealth Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Adapthealth Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Adapthealth Corp is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with FirstCash and Adapthealth Corp

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

The idea behind FirstCash and Adapthealth Corp 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.