Correlation Between Adams Natural and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both Adams Natural and Goldman Sachs 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 Goldman Sachs 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 Goldman Sachs Absolute, you can compare the effects of market volatilities on Adams Natural and Goldman Sachs 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 Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adams Natural and Goldman Sachs.
Diversification Opportunities for Adams Natural and Goldman Sachs
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Adams and Goldman is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Adams Natural Resources and Goldman Sachs Absolute in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Absolute 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 Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs Absolute has no effect on the direction of Adams Natural i.e., Adams Natural and Goldman Sachs go up and down completely randomly.
Pair Corralation between Adams Natural and Goldman Sachs
Considering the 90-day investment horizon Adams Natural Resources is expected to generate 3.27 times more return on investment than Goldman Sachs. However, Adams Natural is 3.27 times more volatile than Goldman Sachs Absolute. It trades about 0.04 of its potential returns per unit of risk. Goldman Sachs Absolute is currently generating about 0.11 per unit of risk. If you would invest 1,847 in Adams Natural Resources on September 12, 2024 and sell it today you would earn a total of 403.00 from holding Adams Natural Resources or generate 21.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Adams Natural Resources vs. Goldman Sachs Absolute
Performance |
| Timeline |
| Adams Natural Resources |
| Goldman Sachs Absolute |
Adams Natural and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adams Natural and Goldman Sachs
The main advantage of trading using opposite Adams Natural and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adams Natural position performs unexpectedly, Goldman Sachs 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 Goldman Sachs will offset losses from the drop in Goldman Sachs' long position.| Adams Natural vs. Oxford Lane Capital | Adams Natural vs. Orchid Island Capital | Adams Natural vs. Guggenheim Strategic Opportunities | Adams Natural vs. Stone Harbor Emerging |
| Goldman Sachs vs. Tortoise Energy Independence | Goldman Sachs vs. Adams Natural Resources | Goldman Sachs vs. Hennessy Bp Energy | Goldman Sachs vs. Clearbridge Energy Mlp |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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