Correlation Between Adams Resources and NASDAQ-100 INDEX

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Can any of the company-specific risk be diversified away by investing in both Adams Resources and NASDAQ-100 INDEX 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 NASDAQ-100 INDEX 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 NASDAQ-100 INDEX FUND, you can compare the effects of market volatilities on Adams Resources and NASDAQ-100 INDEX 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 NASDAQ-100 INDEX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adams Resources and NASDAQ-100 INDEX.

Diversification Opportunities for Adams Resources and NASDAQ-100 INDEX

  Correlation Coefficient

Very weak diversification

The 3 months correlation between Adams and NASDAQ-100 is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Adams Resources Energy and NASDAQ-100 INDEX FUND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NASDAQ-100 INDEX FUND 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 NASDAQ-100 INDEX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NASDAQ-100 INDEX FUND has no effect on the direction of Adams Resources i.e., Adams Resources and NASDAQ-100 INDEX go up and down completely randomly.

Pair Corralation between Adams Resources and NASDAQ-100 INDEX

Allowing for the 90-day total investment horizon Adams Resources Energy is expected to generate 1.6 times more return on investment than NASDAQ-100 INDEX. However, Adams Resources is 1.6 times more volatile than NASDAQ-100 INDEX FUND. It trades about 0.03 of its potential returns per unit of risk. NASDAQ-100 INDEX FUND is currently generating about 0.0 per unit of risk. If you would invest  2,868  in Adams Resources Energy on December 24, 2022 and sell it today you would earn a total of  861.00  from holding Adams Resources Energy or generate 30.02% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
ValuesDaily Returns

Adams Resources Energy  vs.  NASDAQ-100 INDEX FUND

 Performance (%) 
Adams Resources Energy 

Adams Performance

0 of 100

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 recent stock price tumult, may contribute to shorter-term losses for the shareholders.

NASDAQ-100 Performance

14 of 100

Compared to the overall equity markets, risk-adjusted returns on investments in NASDAQ-100 INDEX FUND are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward-looking signals, NASDAQ-100 INDEX showed solid returns over the last few months and may actually be approaching a breakup point.

Adams Resources and NASDAQ-100 INDEX Volatility Contrast

   Predicted Return Density   

Pair Trading with Adams Resources and NASDAQ-100 INDEX

The main advantage of trading using opposite Adams Resources and NASDAQ-100 INDEX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adams Resources position performs unexpectedly, NASDAQ-100 INDEX 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 NASDAQ-100 INDEX will offset losses from the drop in NASDAQ-100 INDEX's long position.
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The idea behind Adams Resources Energy and NASDAQ-100 INDEX FUND 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.
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 Fund Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.

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