Correlation Between Acme United and Adams Resources
Can any of the company-specific risk be diversified away by investing in both Acme United and Adams Resources 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 Acme United and Adams Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Acme United and Adams Resources Energy, you can compare the effects of market volatilities on Acme United and Adams Resources 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 Acme United with a short position of Adams Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acme United and Adams Resources.
Diversification Opportunities for Acme United and Adams Resources
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Acme and Adams is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Acme United and Adams Resources Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adams Resources Energy and Acme United 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 Acme United are associated (or correlated) with Adams Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adams Resources Energy has no effect on the direction of Acme United i.e., Acme United and Adams Resources go up and down completely randomly.
Pair Corralation between Acme United and Adams Resources
Considering the 90-day investment horizon Acme United is expected to under-perform the Adams Resources. In addition to that, Acme United is 5.1 times more volatile than Adams Resources Energy. It trades about -0.2 of its total potential returns per unit of risk. Adams Resources Energy is currently generating about 0.15 per unit of volatility. If you would invest 3,703 in Adams Resources Energy on November 3, 2024 and sell it today you would earn a total of 92.00 from holding Adams Resources Energy or generate 2.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Acme United vs. Adams Resources Energy
Performance |
| Timeline |
| Acme United |
| Adams Resources Energy |
Acme United and Adams Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Acme United and Adams Resources
The main advantage of trading using opposite Acme United and Adams Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acme United position performs unexpectedly, Adams Resources 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 Adams Resources will offset losses from the drop in Adams Resources' long position.| Acme United vs. Mannatech Incorporated | Acme United vs. European Wax Center | Acme United vs. Inter Parfums | Acme United vs. Spectrum Brands Holdings |
| Adams Resources vs. PrimeEnergy | Adams Resources vs. Barnwell Industries | Adams Resources vs. Acme United | Adams Resources vs. CKX Lands |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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