Correlation Between Adams Natural and Federated High
Can any of the company-specific risk be diversified away by investing in both Adams Natural and Federated High 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 Federated High 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 Federated High Yield, you can compare the effects of market volatilities on Adams Natural and Federated High 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 Federated High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adams Natural and Federated High.
Diversification Opportunities for Adams Natural and Federated High
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Adams and Federated is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Adams Natural Resources and Federated High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated High Yield 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 Federated High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated High Yield has no effect on the direction of Adams Natural i.e., Adams Natural and Federated High go up and down completely randomly.
Pair Corralation between Adams Natural and Federated High
Considering the 90-day investment horizon Adams Natural Resources is expected to generate 4.27 times more return on investment than Federated High. However, Adams Natural is 4.27 times more volatile than Federated High Yield. It trades about 0.39 of its potential returns per unit of risk. Federated High Yield is currently generating about 0.26 per unit of risk. If you would invest 2,133 in Adams Natural Resources on October 25, 2024 and sell it today you would earn a total of 173.00 from holding Adams Natural Resources or generate 8.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Adams Natural Resources vs. Federated High Yield
Performance |
| Timeline |
| Adams Natural Resources |
| Federated High Yield |
Adams Natural and Federated High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adams Natural and Federated High
The main advantage of trading using opposite Adams Natural and Federated High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adams Natural position performs unexpectedly, Federated High 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 Federated High will offset losses from the drop in Federated High's long position.| Adams Natural vs. Munivest Fund | Adams Natural vs. MFS High Income | Adams Natural vs. Franklin Templeton Limited | Adams Natural vs. MFS Investment Grade |
| Federated High vs. Jpmorgan High Yield | Federated High vs. Lord Abbett Short | Federated High vs. T Rowe Price | Federated High vs. Voya High Yield |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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