Correlation Between Adams Natural and Loomis Sayles
Can any of the company-specific risk be diversified away by investing in both Adams Natural and Loomis Sayles 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 Loomis Sayles 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 Loomis Sayles High, you can compare the effects of market volatilities on Adams Natural and Loomis Sayles 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 Loomis Sayles. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adams Natural and Loomis Sayles.
Diversification Opportunities for Adams Natural and Loomis Sayles
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Adams and Loomis is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Adams Natural Resources and Loomis Sayles High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loomis Sayles High 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 Loomis Sayles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loomis Sayles High has no effect on the direction of Adams Natural i.e., Adams Natural and Loomis Sayles go up and down completely randomly.
Pair Corralation between Adams Natural and Loomis Sayles
Considering the 90-day investment horizon Adams Natural Resources is expected to under-perform the Loomis Sayles. In addition to that, Adams Natural is 5.39 times more volatile than Loomis Sayles High. It trades about -0.16 of its total potential returns per unit of risk. Loomis Sayles High is currently generating about 0.17 per unit of volatility. If you would invest 896.00 in Loomis Sayles High on September 13, 2024 and sell it today you would earn a total of 6.00 from holding Loomis Sayles High or generate 0.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Adams Natural Resources vs. Loomis Sayles High
Performance |
| Timeline |
| Adams Natural Resources |
| Loomis Sayles High |
Adams Natural and Loomis Sayles Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adams Natural and Loomis Sayles
The main advantage of trading using opposite Adams Natural and Loomis Sayles positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adams Natural position performs unexpectedly, Loomis Sayles 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 Loomis Sayles will offset losses from the drop in Loomis Sayles' 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 |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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