Correlation Between Adams Natural and Scharf Global
Can any of the company-specific risk be diversified away by investing in both Adams Natural and Scharf Global 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 Scharf Global 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 Scharf Global Opportunity, you can compare the effects of market volatilities on Adams Natural and Scharf Global 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 Scharf Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adams Natural and Scharf Global.
Diversification Opportunities for Adams Natural and Scharf Global
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Adams and Scharf is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Adams Natural Resources and Scharf Global Opportunity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scharf Global Opportunity 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 Scharf Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scharf Global Opportunity has no effect on the direction of Adams Natural i.e., Adams Natural and Scharf Global go up and down completely randomly.
Pair Corralation between Adams Natural and Scharf Global
Considering the 90-day investment horizon Adams Natural Resources is expected to under-perform the Scharf Global. In addition to that, Adams Natural is 2.11 times more volatile than Scharf Global Opportunity. It trades about -0.25 of its total potential returns per unit of risk. Scharf Global Opportunity is currently generating about -0.01 per unit of volatility. If you would invest 3,706 in Scharf Global Opportunity on September 15, 2024 and sell it today you would lose (3.00) from holding Scharf Global Opportunity or give up 0.08% 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. Scharf Global Opportunity
Performance |
| Timeline |
| Adams Natural Resources |
| Scharf Global Opportunity |
Adams Natural and Scharf Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adams Natural and Scharf Global
The main advantage of trading using opposite Adams Natural and Scharf Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adams Natural position performs unexpectedly, Scharf Global 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 Scharf Global will offset losses from the drop in Scharf Global'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 |
| Scharf Global vs. Dreyfus Natural Resources | Scharf Global vs. Adams Natural Resources | Scharf Global vs. Gamco Natural Resources | Scharf Global 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |