Correlation Between Adams Natural and Banking Fund
Can any of the company-specific risk be diversified away by investing in both Adams Natural and Banking Fund 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 Banking Fund 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 Banking Fund Class, you can compare the effects of market volatilities on Adams Natural and Banking Fund 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 Banking Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adams Natural and Banking Fund.
Diversification Opportunities for Adams Natural and Banking Fund
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Adams and Banking is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Adams Natural Resources and Banking Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banking Fund Class 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 Banking Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banking Fund Class has no effect on the direction of Adams Natural i.e., Adams Natural and Banking Fund go up and down completely randomly.
Pair Corralation between Adams Natural and Banking Fund
Considering the 90-day investment horizon Adams Natural Resources is expected to under-perform the Banking Fund. In addition to that, Adams Natural is 1.17 times more volatile than Banking Fund Class. It trades about -0.19 of its total potential returns per unit of risk. Banking Fund Class is currently generating about -0.08 per unit of volatility. If you would invest 9,916 in Banking Fund Class on September 12, 2024 and sell it today you would lose (144.00) from holding Banking Fund Class or give up 1.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Adams Natural Resources vs. Banking Fund Class
Performance |
| Timeline |
| Adams Natural Resources |
| Banking Fund Class |
Adams Natural and Banking Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adams Natural and Banking Fund
The main advantage of trading using opposite Adams Natural and Banking Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adams Natural position performs unexpectedly, Banking Fund 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 Banking Fund will offset losses from the drop in Banking Fund'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 |
| Banking Fund vs. Banking Fund Class | Banking Fund vs. Banking Fund Class | Banking Fund vs. Banking Fund Investor | Banking Fund vs. Banking Portfolio Banking |
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 Managers module to screen money managers from public funds and ETFs managed around the world.
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