Correlation Between Adams Natural and Clearbridge Energy

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

Diversification Opportunities for Adams Natural and Clearbridge Energy

0.57

Correlation Coefficient

Adams Natural  Clearbridge Energy

Very weak diversification

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

Pair Corralation between Adams Natural and Clearbridge Energy

Considering the 90-day investment horizon Adams Natural is expected to generate 5.95 times less return on investment than Clearbridge Energy. But when comparing it to its historical volatility, Adams Natural Resources is 1.04 times less risky than Clearbridge Energy. It trades about 0.01 of its potential returns per unit of risk. Clearbridge Energy Mlp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  3,355  in Clearbridge Energy Mlp on January 8, 2025 and sell it today you would earn a total of  1,971  from holding Clearbridge Energy Mlp or generate 58.75% return on investment over 90 days.

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

Adams Natural Resources  vs.  Clearbridge Energy Mlp

Adams Natural Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Adams Natural Resources has generated negative risk-adjusted returns adding no value to fund investors. In spite of fragile performance in the last few months, the Fund's technical and fundamental indicators remain very healthy which may send shares a bit higher in May 2025. The recent disarray may also be a sign of long period up-swing for the fund investors.

Clearbridge Energy Mlp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Clearbridge Energy Mlp has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Clearbridge Energy 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 Clearbridge Energy

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

The idea behind Adams Natural Resources and Clearbridge Energy Mlp 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.