Correlation Between Adams Resources and National Fuel
Can any of the company-specific risk be diversified away by investing in both Adams Resources and National Fuel 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 National Fuel 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 National Fuel Gas, you can compare the effects of market volatilities on Adams Resources and National Fuel 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 National Fuel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adams Resources and National Fuel.
Diversification Opportunities for Adams Resources and National Fuel
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Adams and National is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Adams Resources Energy and National Fuel Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Fuel Gas 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 National Fuel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Fuel Gas has no effect on the direction of Adams Resources i.e., Adams Resources and National Fuel go up and down completely randomly.
Pair Corralation between Adams Resources and National Fuel
Allowing for the 90-day total investment horizon Adams Resources Energy is expected to generate 1.81 times more return on investment than National Fuel. However, Adams Resources is 1.81 times more volatile than National Fuel Gas. It trades about 0.26 of its potential returns per unit of risk. National Fuel Gas is currently generating about 0.26 per unit of risk. If you would invest 2,663 in Adams Resources Energy on January 26, 2024 and sell it today you would earn a total of 337.00 from holding Adams Resources Energy or generate 12.65% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Adams Resources Energy vs. National Fuel Gas
Performance |
Timeline |
Adams Resources Energy |
National Fuel Gas |
Adams Resources and National Fuel Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Adams Resources and National Fuel
The main advantage of trading using opposite Adams Resources and National Fuel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adams Resources position performs unexpectedly, National Fuel 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 National Fuel will offset losses from the drop in National Fuel's long position.Adams Resources vs. Delek Energy | Adams Resources vs. Sunoco LP | Adams Resources vs. CVR Energy | Adams Resources vs. Phillips 66 |
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Check out your portfolio center.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 Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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