Correlation Between Carillon Scout and Adams Natural

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

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

Diversification Opportunities for Carillon Scout and Adams Natural

0.83

Correlation Coefficient

Carillon Scout  Adams Natural

Very poor diversification

The 3 months correlation between Carillon and Adams is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Carillon Scout Mid 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 Carillon Scout 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 Carillon Scout Mid 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 Carillon Scout i.e., Carillon Scout and Adams Natural go up and down completely randomly.

Pair Corralation between Carillon Scout and Adams Natural

Assuming the 90 days horizon Carillon Scout is expected to generate 1.01 times less return on investment than Adams Natural. But when comparing it to its historical volatility, Carillon Scout Mid is 1.3 times less risky than Adams Natural. It trades about 0.23 of its potential returns per unit of risk. Adams Natural Resources is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  1,932  in Adams Natural Resources on May 3, 2025 and sell it today you would earn a total of  211.00  from holding Adams Natural Resources or generate 10.92% return on investment over 90 days.

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

Carillon Scout Mid  vs.  Adams Natural Resources

Carillon Scout Mid

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Carillon Scout Mid are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Carillon Scout may actually be approaching a critical reversion point that can send shares even higher in September 2025.

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 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of very weak technical and fundamental indicators, Adams Natural may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Carillon Scout and Adams Natural

The main advantage of trading using opposite Carillon Scout and Adams Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carillon Scout 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 Carillon Scout Mid 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.

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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.