Correlation Between Adams Natural and Grizzly Short
Can any of the company-specific risk be diversified away by investing in both Adams Natural and Grizzly Short 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 Grizzly Short 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 Grizzly Short Fund, you can compare the effects of market volatilities on Adams Natural and Grizzly Short 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 Grizzly Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adams Natural and Grizzly Short.
Diversification Opportunities for Adams Natural and Grizzly Short
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Adams and Grizzly is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Adams Natural Resources and Grizzly Short Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grizzly Short 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 Grizzly Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grizzly Short has no effect on the direction of Adams Natural i.e., Adams Natural and Grizzly Short go up and down completely randomly.
Pair Corralation between Adams Natural and Grizzly Short
Considering the 90-day investment horizon Adams Natural Resources is expected to generate 1.69 times more return on investment than Grizzly Short. However, Adams Natural is 1.69 times more volatile than Grizzly Short Fund. It trades about 0.05 of its potential returns per unit of risk. Grizzly Short Fund is currently generating about -0.23 per unit of risk. If you would invest 2,145 in Adams Natural Resources on November 3, 2024 and sell it today you would earn a total of 25.00 from holding Adams Natural Resources or generate 1.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Adams Natural Resources vs. Grizzly Short Fund
Performance |
| Timeline |
| Adams Natural Resources |
| Grizzly Short |
Adams Natural and Grizzly Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adams Natural and Grizzly Short
The main advantage of trading using opposite Adams Natural and Grizzly Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adams Natural position performs unexpectedly, Grizzly Short 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 Grizzly Short will offset losses from the drop in Grizzly Short'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 |
| Grizzly Short vs. Absolute Convertible Arbitrage | Grizzly Short vs. Columbia Convertible Securities | Grizzly Short vs. Lord Abbett Convertible |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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