Correlation Between Adams Natural and Great-west Lifetime
Can any of the company-specific risk be diversified away by investing in both Adams Natural and Great-west Lifetime 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 Great-west Lifetime 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 Great West Lifetime 2030, you can compare the effects of market volatilities on Adams Natural and Great-west Lifetime 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 Great-west Lifetime. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adams Natural and Great-west Lifetime.
Diversification Opportunities for Adams Natural and Great-west Lifetime
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Adams and Great-west is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Adams Natural Resources and Great West Lifetime 2030 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West Lifetime 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 Great-west Lifetime. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great West Lifetime has no effect on the direction of Adams Natural i.e., Adams Natural and Great-west Lifetime go up and down completely randomly.
Pair Corralation between Adams Natural and Great-west Lifetime
Considering the 90-day investment horizon Adams Natural Resources is expected to generate 1.92 times more return on investment than Great-west Lifetime. However, Adams Natural is 1.92 times more volatile than Great West Lifetime 2030. It trades about 0.19 of its potential returns per unit of risk. Great West Lifetime 2030 is currently generating about 0.3 per unit of risk. If you would invest 2,272 in Adams Natural Resources on September 5, 2024 and sell it today you would earn a total of 75.00 from holding Adams Natural Resources or generate 3.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Adams Natural Resources vs. Great West Lifetime 2030
Performance |
| Timeline |
| Adams Natural Resources |
| Great West Lifetime |
Adams Natural and Great-west Lifetime Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adams Natural and Great-west Lifetime
The main advantage of trading using opposite Adams Natural and Great-west Lifetime positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adams Natural position performs unexpectedly, Great-west Lifetime 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 Great-west Lifetime will offset losses from the drop in Great-west Lifetime'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 |
| Great-west Lifetime vs. Adams Natural Resources | Great-west Lifetime vs. Goehring Rozencwajg Resources | Great-west Lifetime vs. Energy Basic Materials | Great-west Lifetime vs. Firsthand Alternative 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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