Correlation Between Adams Natural and Steward Large
Can any of the company-specific risk be diversified away by investing in both Adams Natural and Steward Large 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 Steward Large 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 Steward Large Cap, you can compare the effects of market volatilities on Adams Natural and Steward Large 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 Steward Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adams Natural and Steward Large.
Diversification Opportunities for Adams Natural and Steward Large
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Adams and Steward is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Adams Natural Resources and Steward Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steward Large Cap 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 Steward Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steward Large Cap has no effect on the direction of Adams Natural i.e., Adams Natural and Steward Large go up and down completely randomly.
Pair Corralation between Adams Natural and Steward Large
Considering the 90-day investment horizon Adams Natural is expected to generate 1.17 times less return on investment than Steward Large. In addition to that, Adams Natural is 1.46 times more volatile than Steward Large Cap. It trades about 0.11 of its total potential returns per unit of risk. Steward Large Cap is currently generating about 0.19 per unit of volatility. If you would invest 3,524 in Steward Large Cap on September 12, 2024 and sell it today you would earn a total of 285.00 from holding Steward Large Cap or generate 8.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.44% |
| Values | Daily Returns |
Adams Natural Resources vs. Steward Large Cap
Performance |
| Timeline |
| Adams Natural Resources |
| Steward Large Cap |
Adams Natural and Steward Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adams Natural and Steward Large
The main advantage of trading using opposite Adams Natural and Steward Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adams Natural position performs unexpectedly, Steward Large 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 Steward Large will offset losses from the drop in Steward Large'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 |
| Steward Large vs. Firsthand Technology Opportunities | Steward Large vs. Allianzgi Technology Fund | Steward Large vs. Blackrock Science Technology | Steward Large vs. Technology Ultrasector Profund |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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