Correlation Between Adams Diversified and Pear Tree

Can any of the company-specific risk be diversified away by investing in both Adams Diversified and Pear Tree 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 Diversified and Pear Tree into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Adams Diversified Equity and Pear Tree Panagora, you can compare the effects of market volatilities on Adams Diversified and Pear Tree 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 Diversified with a short position of Pear Tree. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adams Diversified and Pear Tree.

Diversification Opportunities for Adams Diversified and Pear Tree

0.72

Correlation Coefficient

Adams Diversified  Pear Tree

Poor diversification

The 3 months correlation between Adams and Pear is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Adams Diversified Equity and Pear Tree Panagora in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pear Tree Panagora and Adams Diversified 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 Diversified Equity are associated (or correlated) with Pear Tree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pear Tree Panagora has no effect on the direction of Adams Diversified i.e., Adams Diversified and Pear Tree go up and down completely randomly.

Pair Corralation between Adams Diversified and Pear Tree

If you would invest  1,938  in Adams Diversified Equity on September 14, 2024 and sell it today you would earn a total of  118.00  from holding Adams Diversified Equity or generate 6.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	1.59%
Values	Daily Returns

Adams Diversified Equity  vs.  Pear Tree Panagora

Adams Diversified Equity

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Adams Diversified Equity are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Adams Diversified is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pear Tree Panagora

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pear Tree Panagora has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Pear Tree is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Adams Diversified and Pear Tree

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

The idea behind Adams Diversified Equity and Pear Tree Panagora 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.