Correlation Between Adams Natural and Rand Capital
Can any of the company-specific risk be diversified away by investing in both Adams Natural and Rand Capital 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 Rand Capital 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 Rand Capital Corp, you can compare the effects of market volatilities on Adams Natural and Rand Capital 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 Rand Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adams Natural and Rand Capital.
Diversification Opportunities for Adams Natural and Rand Capital
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Adams and Rand is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Adams Natural Resources and Rand Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rand Capital Corp 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 Rand Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rand Capital Corp has no effect on the direction of Adams Natural i.e., Adams Natural and Rand Capital go up and down completely randomly.
Pair Corralation between Adams Natural and Rand Capital
Considering the 90-day investment horizon Adams Natural Resources is expected to under-perform the Rand Capital. But the fund apears to be less risky and, when comparing its historical volatility, Adams Natural Resources is 4.09 times less risky than Rand Capital. The fund trades about -0.18 of its potential returns per unit of risk. The Rand Capital Corp is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 1,640 in Rand Capital Corp on September 12, 2024 and sell it today you would earn a total of 468.00 from holding Rand Capital Corp or generate 28.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Adams Natural Resources vs. Rand Capital Corp
Performance |
| Timeline |
| Adams Natural Resources |
| Rand Capital Corp |
Adams Natural and Rand Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adams Natural and Rand Capital
The main advantage of trading using opposite Adams Natural and Rand Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adams Natural position performs unexpectedly, Rand Capital 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 Rand Capital will offset losses from the drop in Rand Capital'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 |
| Rand Capital vs. Stellus Capital Investment | Rand Capital vs. Prospect Capital | Rand Capital vs. Gladstone Capital | Rand Capital 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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