Correlation Between Adams Natural and Eagle Small
Can any of the company-specific risk be diversified away by investing in both Adams Natural and Eagle 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 Eagle 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 Eagle Small Cap, you can compare the effects of market volatilities on Adams Natural and Eagle 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 Eagle Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adams Natural and Eagle Small.
Diversification Opportunities for Adams Natural and Eagle Small
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Adams and Eagle is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Adams Natural Resources and Eagle Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle 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 Eagle Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Small Cap has no effect on the direction of Adams Natural i.e., Adams Natural and Eagle Small go up and down completely randomly.
Pair Corralation between Adams Natural and Eagle Small
Considering the 90-day investment horizon Adams Natural is expected to generate 1.86 times less return on investment than Eagle Small. But when comparing it to its historical volatility, Adams Natural Resources is 1.93 times less risky than Eagle Small. It trades about 0.28 of its potential returns per unit of risk. Eagle Small Cap is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 2,512 in Eagle Small Cap on September 3, 2024 and sell it today you would earn a total of 198.00 from holding Eagle Small Cap or generate 7.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Adams Natural Resources vs. Eagle Small Cap
Performance |
| Timeline |
| Adams Natural Resources |
| Eagle Small Cap |
Adams Natural and Eagle Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adams Natural and Eagle Small
The main advantage of trading using opposite Adams Natural and Eagle Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adams Natural position performs unexpectedly, Eagle 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 Eagle Small will offset losses from the drop in Eagle Small'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 |
| Eagle Small vs. Franklin Natural Resources | Eagle Small vs. Adams Natural Resources | Eagle Small vs. World Energy Fund | Eagle Small vs. Salient Mlp Energy |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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