Correlation Between Cargile Fund and Adams Diversified

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

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

Diversification Opportunities for Cargile Fund and Adams Diversified

0.8

Correlation Coefficient

Cargile Fund  Adams Diversified

Very poor diversification

The 3 months correlation between Cargile and Adams is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Cargile Fund and Adams Diversified Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adams Diversified Equity and Cargile Fund 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 Cargile Fund are associated (or correlated) with Adams Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adams Diversified Equity has no effect on the direction of Cargile Fund i.e., Cargile Fund and Adams Diversified go up and down completely randomly.

Pair Corralation between Cargile Fund and Adams Diversified

Assuming the 90 days horizon Cargile Fund is expected to generate 17.33 times less return on investment than Adams Diversified. But when comparing it to its historical volatility, Cargile Fund is 1.63 times less risky than Adams Diversified. It trades about 0.01 of its potential returns per unit of risk. Adams Diversified Equity is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  2,048  in Adams Diversified Equity on October 22, 2024 and sell it today you would earn a total of  46.00  from holding Adams Diversified Equity or generate 2.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Cargile Fund  vs.  Adams Diversified Equity

Cargile Fund

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cargile Fund are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Cargile Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Adams Diversified Equity

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Adams Diversified Equity are ranked lower than 7 (%) 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.

Pair Trading with Cargile Fund and Adams Diversified

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

The idea behind Cargile Fund and Adams Diversified Equity 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.