Correlation Between Energy Services and Adams Natural
Can any of the company-specific risk be diversified away by investing in both Energy Services and Adams Natural 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 Energy Services and Adams Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energy Services Fund and Adams Natural Resources, you can compare the effects of market volatilities on Energy Services and Adams Natural 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 Energy Services with a short position of Adams Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Services and Adams Natural.
Diversification Opportunities for Energy Services and Adams Natural
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ENERGY and Adams is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Energy Services Fund and Adams Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adams Natural Resources and Energy Services 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 Energy Services Fund are associated (or correlated) with Adams Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adams Natural Resources has no effect on the direction of Energy Services i.e., Energy Services and Adams Natural go up and down completely randomly.
Pair Corralation between Energy Services and Adams Natural
Assuming the 90 days horizon Energy Services is expected to generate 28.13 times less return on investment than Adams Natural. In addition to that, Energy Services is 1.69 times more volatile than Adams Natural Resources. It trades about 0.0 of its total potential returns per unit of risk. Adams Natural Resources is currently generating about 0.07 per unit of volatility. If you would invest 1,904 in Adams Natural Resources on October 25, 2024 and sell it today you would earn a total of 402.00 from holding Adams Natural Resources or generate 21.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Energy Services Fund vs. Adams Natural Resources
Performance |
| Timeline |
| Energy Services |
| Adams Natural Resources |
Energy Services and Adams Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energy Services and Adams Natural
The main advantage of trading using opposite Energy Services and Adams Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy Services position performs unexpectedly, Adams Natural 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 Adams Natural will offset losses from the drop in Adams Natural's long position.| Energy Services vs. Vanguard Energy Fund | Energy Services vs. Vanguard Energy Fund | Energy Services vs. Vanguard Energy Index | Energy Services vs. Fidelity Select Portfolios |
| Adams Natural vs. Munivest Fund | Adams Natural vs. MFS High Income | Adams Natural vs. Franklin Templeton Limited | Adams Natural vs. MFS Investment Grade |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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