Correlation Between Mid-cap 15x and Adams Natural

Can any of the company-specific risk be diversified away by investing in both Mid-cap 15x and Adams Natural 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 Mid-cap 15x and Adams Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mid Cap 15x Strategy and Adams Natural Resources, you can compare the effects of market volatilities on Mid-cap 15x and Adams Natural 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 Mid-cap 15x with a short position of Adams Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid-cap 15x and Adams Natural.

Diversification Opportunities for Mid-cap 15x and Adams Natural

0.27

Correlation Coefficient

Mid-cap 15x  Adams Natural

Modest diversification

The 3 months correlation between Mid-cap and Adams is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap 15x Strategy and Adams Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adams Natural Resources and Mid-cap 15x 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 Mid Cap 15x Strategy are associated (or correlated) with Adams Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adams Natural Resources has no effect on the direction of Mid-cap 15x i.e., Mid-cap 15x and Adams Natural go up and down completely randomly.

Pair Corralation between Mid-cap 15x and Adams Natural

Assuming the 90 days horizon Mid Cap 15x Strategy is expected to under-perform the Adams Natural. In addition to that, Mid-cap 15x is 1.36 times more volatile than Adams Natural Resources. It trades about -0.08 of its total potential returns per unit of risk. Adams Natural Resources is currently generating about 0.15 per unit of volatility. If you would invest  2,059  in Adams Natural Resources on December 20, 2024 and sell it today you would earn a total of  211.00  from holding Adams Natural Resources or generate 10.25% return on investment over 90 days.

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

Mid Cap 15x Strategy  vs.  Adams Natural Resources

Mid Cap 15x

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mid Cap 15x Strategy has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Adams Natural Resources

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Adams Natural Resources are ranked lower than 11 (%) 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 April 2025.

Pair Trading with Mid-cap 15x and Adams Natural

The main advantage of trading using opposite Mid-cap 15x and Adams Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mid-cap 15x position performs unexpectedly, Adams Natural 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 Natural will offset losses from the drop in Adams Natural's long position.

The idea behind Mid Cap 15x Strategy and Adams Natural Resources 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.