Correlation Between ADM Endeavors and Thomson Reuters

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

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

Diversification Opportunities for ADM Endeavors and Thomson Reuters

-0.1

Correlation Coefficient

ADM Endeavors  Thomson Reuters

Good diversification

The 3 months correlation between ADM and Thomson is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding ADM Endeavors and Thomson Reuters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thomson Reuters and ADM Endeavors 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 ADM Endeavors are associated (or correlated) with Thomson Reuters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thomson Reuters has no effect on the direction of ADM Endeavors i.e., ADM Endeavors and Thomson Reuters go up and down completely randomly.

Pair Corralation between ADM Endeavors and Thomson Reuters

Given the investment horizon of 90 days ADM Endeavors is expected to generate 4.06 times more return on investment than Thomson Reuters. However, ADM Endeavors is 4.06 times more volatile than Thomson Reuters. It trades about 0.05 of its potential returns per unit of risk. Thomson Reuters is currently generating about 0.1 per unit of risk. If you would invest  4.00  in ADM Endeavors on December 28, 2024 and sell it today you would earn a total of  0.39  from holding ADM Endeavors or generate 9.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.77%
Values	Daily Returns

ADM Endeavors  vs.  Thomson Reuters

ADM Endeavors

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ADM Endeavors are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak primary indicators, ADM Endeavors reported solid returns over the last few months and may actually be approaching a breakup point.

Thomson Reuters

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Thomson Reuters are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, Thomson Reuters may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with ADM Endeavors and Thomson Reuters

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

The idea behind ADM Endeavors and Thomson Reuters 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.