Correlation Between Adams Natural and Jacob Small
Can any of the company-specific risk be diversified away by investing in both Adams Natural and Jacob 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 Jacob 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 Jacob Small Cap, you can compare the effects of market volatilities on Adams Natural and Jacob 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 Jacob Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adams Natural and Jacob Small.
Diversification Opportunities for Adams Natural and Jacob Small
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Adams and Jacob is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Adams Natural Resources and Jacob Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jacob 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 Jacob Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jacob Small Cap has no effect on the direction of Adams Natural i.e., Adams Natural and Jacob Small go up and down completely randomly.
Pair Corralation between Adams Natural and Jacob Small
Considering the 90-day investment horizon Adams Natural is expected to generate 2.39 times less return on investment than Jacob Small. But when comparing it to its historical volatility, Adams Natural Resources is 2.2 times less risky than Jacob Small. It trades about 0.08 of its potential returns per unit of risk. Jacob Small Cap is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,839 in Jacob Small Cap on September 1, 2024 and sell it today you would earn a total of 396.00 from holding Jacob Small Cap or generate 21.53% 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. Jacob Small Cap
Performance |
| Timeline |
| Adams Natural Resources |
| Jacob Small Cap |
Adams Natural and Jacob Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adams Natural and Jacob Small
The main advantage of trading using opposite Adams Natural and Jacob Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adams Natural position performs unexpectedly, Jacob 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 Jacob Small will offset losses from the drop in Jacob 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 |
| Jacob Small vs. Jacob Internet Fund | Jacob Small vs. Jacob Small Cap | Jacob Small vs. Jacob Micro Cap | Jacob Small vs. Jacob Micro Cap |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
Other Complementary Tools
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges |