Correlation Between Adams Natural and Mainstay Floating

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

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

Diversification Opportunities for Adams Natural and Mainstay Floating

0.79

Correlation Coefficient

Adams Natural  Mainstay Floating

Poor diversification

The 3 months correlation between Adams and Mainstay is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Adams Natural Resources and Mainstay Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Floating Rate and Adams Natural 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 Natural Resources are associated (or correlated) with Mainstay Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Floating Rate has no effect on the direction of Adams Natural i.e., Adams Natural and Mainstay Floating go up and down completely randomly.

Pair Corralation between Adams Natural and Mainstay Floating

Considering the 90-day investment horizon Adams Natural Resources is expected to generate 7.81 times more return on investment than Mainstay Floating. However, Adams Natural is 7.81 times more volatile than Mainstay Floating Rate. It trades about 0.16 of its potential returns per unit of risk. Mainstay Floating Rate is currently generating about 0.24 per unit of risk. If you would invest  2,176  in Adams Natural Resources on September 3, 2024 and sell it today you would earn a total of  192.00  from holding Adams Natural Resources or generate 8.82% return on investment over 90 days.

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

Adams Natural Resources  vs.  Mainstay Floating Rate

Adams Natural Resources

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Adams Natural Resources are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of very fragile technical and fundamental indicators, Adams Natural may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Mainstay Floating Rate

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Mainstay Floating Rate are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Mainstay Floating 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 Natural and Mainstay Floating

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

The idea behind Adams Natural Resources and Mainstay Floating Rate 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.