Correlation Between Adams Natural and International Equity
Can any of the company-specific risk be diversified away by investing in both Adams Natural and International Equity 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 International Equity 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 International Equity Index, you can compare the effects of market volatilities on Adams Natural and International Equity 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 International Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adams Natural and International Equity.
Diversification Opportunities for Adams Natural and International Equity
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Adams and International is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Adams Natural Resources and International Equity Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Equity 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 International Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Equity has no effect on the direction of Adams Natural i.e., Adams Natural and International Equity go up and down completely randomly.
Pair Corralation between Adams Natural and International Equity
Considering the 90-day investment horizon Adams Natural Resources is expected to under-perform the International Equity. In addition to that, Adams Natural is 1.75 times more volatile than International Equity Index. It trades about -0.16 of its total potential returns per unit of risk. International Equity Index is currently generating about 0.21 per unit of volatility. If you would invest 1,166 in International Equity Index on September 13, 2024 and sell it today you would earn a total of 29.00 from holding International Equity Index or generate 2.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Adams Natural Resources vs. International Equity Index
Performance |
| Timeline |
| Adams Natural Resources |
| International Equity |
Adams Natural and International Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adams Natural and International Equity
The main advantage of trading using opposite Adams Natural and International Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adams Natural position performs unexpectedly, International Equity 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 International Equity will offset losses from the drop in International Equity'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 |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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