Correlation Between Adams Natural and Logan Ridge
Can any of the company-specific risk be diversified away by investing in both Adams Natural and Logan Ridge 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 Logan Ridge 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 Logan Ridge Finance, you can compare the effects of market volatilities on Adams Natural and Logan Ridge 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 Logan Ridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adams Natural and Logan Ridge.
Diversification Opportunities for Adams Natural and Logan Ridge
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Adams and Logan is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Adams Natural Resources and Logan Ridge Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Logan Ridge Finance 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 Logan Ridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Logan Ridge Finance has no effect on the direction of Adams Natural i.e., Adams Natural and Logan Ridge go up and down completely randomly.
Pair Corralation between Adams Natural and Logan Ridge
Considering the 90-day investment horizon Adams Natural Resources is expected to under-perform the Logan Ridge. But the fund apears to be less risky and, when comparing its historical volatility, Adams Natural Resources is 1.43 times less risky than Logan Ridge. The fund trades about -0.19 of its potential returns per unit of risk. The Logan Ridge Finance is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 2,493 in Logan Ridge Finance on September 12, 2024 and sell it today you would lose (7.00) from holding Logan Ridge Finance or give up 0.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Adams Natural Resources vs. Logan Ridge Finance
Performance |
| Timeline |
| Adams Natural Resources |
| Logan Ridge Finance |
Adams Natural and Logan Ridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adams Natural and Logan Ridge
The main advantage of trading using opposite Adams Natural and Logan Ridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adams Natural position performs unexpectedly, Logan Ridge 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 Logan Ridge will offset losses from the drop in Logan Ridge'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 |
| Logan Ridge vs. Stellus Capital Investment | Logan Ridge vs. Prospect Capital | Logan Ridge vs. Gladstone Capital | Logan Ridge vs. Main Street Capital |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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