Correlation Between Adams Natural and Arbitrage Fund
Can any of the company-specific risk be diversified away by investing in both Adams Natural and Arbitrage Fund 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 Adams Natural and Arbitrage Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adams Natural Resources and The Arbitrage Fund, you can compare the effects of market volatilities on Adams Natural and Arbitrage Fund 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 Adams Natural with a short position of Arbitrage Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adams Natural and Arbitrage Fund.
Diversification Opportunities for Adams Natural and Arbitrage Fund
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Adams and Arbitrage is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Adams Natural Resources and The Arbitrage Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arbitrage Fund and Adams Natural 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 Adams Natural Resources are associated (or correlated) with Arbitrage Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arbitrage Fund has no effect on the direction of Adams Natural i.e., Adams Natural and Arbitrage Fund go up and down completely randomly.
Pair Corralation between Adams Natural and Arbitrage Fund
Considering the 90-day investment horizon Adams Natural Resources is expected to under-perform the Arbitrage Fund. In addition to that, Adams Natural is 4.84 times more volatile than The Arbitrage Fund. It trades about -0.25 of its total potential returns per unit of risk. The Arbitrage Fund is currently generating about 0.05 per unit of volatility. If you would invest 1,350 in The Arbitrage Fund on September 15, 2024 and sell it today you would earn a total of 3.00 from holding The Arbitrage Fund or generate 0.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Adams Natural Resources vs. The Arbitrage Fund
Performance |
| Timeline |
| Adams Natural Resources |
| Arbitrage Fund |
Adams Natural and Arbitrage Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adams Natural and Arbitrage Fund
The main advantage of trading using opposite Adams Natural and Arbitrage Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adams Natural position performs unexpectedly, Arbitrage Fund 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 Arbitrage Fund will offset losses from the drop in Arbitrage Fund's long position.| Adams Natural vs. Liberty All Star | Adams Natural vs. Tri Continental Closed | Adams Natural vs. Royce Value Closed | Adams Natural vs. Central Securities |
| Arbitrage Fund vs. Invesco Energy Fund | Arbitrage Fund vs. Dreyfus Natural Resources | Arbitrage Fund vs. Jennison Natural Resources | Arbitrage Fund vs. Adams Natural Resources |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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