Correlation Between Adams Natural and World Energy
Can any of the company-specific risk be diversified away by investing in both Adams Natural and World Energy 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 World Energy 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 World Energy Fund, you can compare the effects of market volatilities on Adams Natural and World Energy 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 World Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adams Natural and World Energy.
Diversification Opportunities for Adams Natural and World Energy
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Adams and World is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Adams Natural Resources and World Energy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on World Energy 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 World Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of World Energy has no effect on the direction of Adams Natural i.e., Adams Natural and World Energy go up and down completely randomly.
Pair Corralation between Adams Natural and World Energy
Considering the 90-day investment horizon Adams Natural Resources is expected to generate 0.86 times more return on investment than World Energy. However, Adams Natural Resources is 1.16 times less risky than World Energy. It trades about 0.18 of its potential returns per unit of risk. World Energy Fund is currently generating about 0.14 per unit of risk. If you would invest 1,972 in Adams Natural Resources on May 29, 2025 and sell it today you would earn a total of 194.00 from holding Adams Natural Resources or generate 9.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Adams Natural Resources vs. World Energy Fund
Performance |
| Timeline |
| Adams Natural Resources |
| World Energy |
Adams Natural and World Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adams Natural and World Energy
The main advantage of trading using opposite Adams Natural and World Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adams Natural position performs unexpectedly, World Energy 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 World Energy will offset losses from the drop in World Energy's long position.| Adams Natural vs. Adams Diversified Equity | Adams Natural vs. Central Securities | Adams Natural vs. General American Investors | Adams Natural vs. Putnam Municipal Opportunities |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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