Correlation Between All American and ADM Endeavors

Can any of the company-specific risk be diversified away by investing in both All American and ADM Endeavors 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 All American and ADM Endeavors into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between All American Pet and ADM Endeavors, you can compare the effects of market volatilities on All American and ADM Endeavors 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 All American with a short position of ADM Endeavors. Check out your portfolio center. Please also check ongoing floating volatility patterns of All American and ADM Endeavors.

Diversification Opportunities for All American and ADM Endeavors

0.42

Correlation Coefficient

All American  ADM Endeavors

Very weak diversification

The 3 months correlation between All and ADM is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding All American Pet and ADM Endeavors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADM Endeavors and All American 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 All American Pet are associated (or correlated) with ADM Endeavors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADM Endeavors has no effect on the direction of All American i.e., All American and ADM Endeavors go up and down completely randomly.

Pair Corralation between All American and ADM Endeavors

Given the investment horizon of 90 days All American Pet is expected to under-perform the ADM Endeavors. In addition to that, All American is 3.38 times more volatile than ADM Endeavors. It trades about -0.23 of its total potential returns per unit of risk. ADM Endeavors is currently generating about -0.05 per unit of volatility. If you would invest  4.80  in ADM Endeavors on October 10, 2024 and sell it today you would lose (0.51) from holding ADM Endeavors or give up 10.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

All American Pet  vs.  ADM Endeavors

All American Pet

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days All American Pet has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

ADM Endeavors

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ADM Endeavors has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's primary indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with All American and ADM Endeavors

The main advantage of trading using opposite All American and ADM Endeavors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if All American position performs unexpectedly, ADM Endeavors 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 ADM Endeavors will offset losses from the drop in ADM Endeavors' long position.

The idea behind All American Pet and ADM Endeavors pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.