Correlation Between Adams Resources and Icahn Enterprises

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

By analyzing existing cross correlation between Adams Resources Energy and Icahn Enterprises LP, you can compare the effects of market volatilities on Adams Resources and Icahn Enterprises 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 Resources with a short position of Icahn Enterprises. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adams Resources and Icahn Enterprises.

Diversification Opportunities for Adams Resources and Icahn Enterprises

0.48

Correlation Coefficient

Adams Resources  Icahn Enterprises

Very weak diversification

The 3 months correlation between Adams and Icahn is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Adams Resources Energy and Icahn Enterprises LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icahn Enterprises and Adams Resources 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 Resources Energy are associated (or correlated) with Icahn Enterprises. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icahn Enterprises has no effect on the direction of Adams Resources i.e., Adams Resources and Icahn Enterprises go up and down completely randomly.

Pair Corralation between Adams Resources and Icahn Enterprises

Allowing for the 90-day total investment horizon Adams Resources is expected to generate 2.0 times less return on investment than Icahn Enterprises. But when comparing it to its historical volatility, Adams Resources Energy is 3.85 times less risky than Icahn Enterprises. It trades about 0.14 of its potential returns per unit of risk. Icahn Enterprises LP is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  865.00  in Icahn Enterprises LP on December 26, 2024 and sell it today you would earn a total of  63.00  from holding Icahn Enterprises LP or generate 7.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	45.0%
Values	Daily Returns

Adams Resources Energy  vs.  Icahn Enterprises LP

Adams Resources Energy

Risk-Adjusted Performance

Good

Over the last 90 days Adams Resources Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Adams Resources is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Icahn Enterprises

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Icahn Enterprises LP are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting technical and fundamental indicators, Icahn Enterprises may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Adams Resources and Icahn Enterprises

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

The idea behind Adams Resources Energy and Icahn Enterprises LP 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.