Correlation Between Adams Natural and Nationwide Small
Can any of the company-specific risk be diversified away by investing in both Adams Natural and Nationwide Small 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 Nationwide Small 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 Nationwide Small Cap, you can compare the effects of market volatilities on Adams Natural and Nationwide Small 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 Nationwide Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adams Natural and Nationwide Small.
Diversification Opportunities for Adams Natural and Nationwide Small
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Adams and Nationwide is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Adams Natural Resources and Nationwide Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Small Cap 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 Nationwide Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Small Cap has no effect on the direction of Adams Natural i.e., Adams Natural and Nationwide Small go up and down completely randomly.
Pair Corralation between Adams Natural and Nationwide Small
Considering the 90-day investment horizon Adams Natural is expected to generate 1.57 times less return on investment than Nationwide Small. But when comparing it to its historical volatility, Adams Natural Resources is 1.1 times less risky than Nationwide Small. It trades about 0.04 of its potential returns per unit of risk. Nationwide Small Cap is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 926.00 in Nationwide Small Cap on September 12, 2024 and sell it today you would earn a total of 351.00 from holding Nationwide Small Cap or generate 37.9% 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. Nationwide Small Cap
Performance |
| Timeline |
| Adams Natural Resources |
| Nationwide Small Cap |
Adams Natural and Nationwide Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adams Natural and Nationwide Small
The main advantage of trading using opposite Adams Natural and Nationwide Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adams Natural position performs unexpectedly, Nationwide Small 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 Nationwide Small will offset losses from the drop in Nationwide Small's 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 |
| Nationwide Small vs. World Energy Fund | Nationwide Small vs. Adams Natural Resources | Nationwide Small vs. Gamco Natural Resources | Nationwide Small vs. Jennison 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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