Correlation Between Aqua America and Superior Plus
Can any of the company-specific risk be diversified away by investing in both Aqua America and Superior Plus 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 Aqua America and Superior Plus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aqua America and Superior Plus Corp, you can compare the effects of market volatilities on Aqua America and Superior Plus 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 Aqua America with a short position of Superior Plus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqua America and Superior Plus.
Diversification Opportunities for Aqua America and Superior Plus
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Aqua and Superior is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Aqua America and Superior Plus Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Superior Plus Corp and Aqua America 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 Aqua America are associated (or correlated) with Superior Plus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Superior Plus Corp has no effect on the direction of Aqua America i.e., Aqua America and Superior Plus go up and down completely randomly.
Pair Corralation between Aqua America and Superior Plus
Assuming the 90 days horizon Aqua America is expected to generate 0.38 times more return on investment than Superior Plus. However, Aqua America is 2.62 times less risky than Superior Plus. It trades about 0.18 of its potential returns per unit of risk. Superior Plus Corp is currently generating about 0.03 per unit of risk. If you would invest 3,512 in Aqua America on September 2, 2024 and sell it today you would earn a total of 252.00 from holding Aqua America or generate 7.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aqua America vs. Superior Plus Corp
Performance |
| Timeline |
| Aqua America |
| Superior Plus Corp |
Aqua America and Superior Plus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aqua America and Superior Plus
The main advantage of trading using opposite Aqua America and Superior Plus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aqua America position performs unexpectedly, Superior Plus 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 Superior Plus will offset losses from the drop in Superior Plus' long position.| Aqua America vs. STMicroelectronics NV | Aqua America vs. Elmos Semiconductor SE | Aqua America vs. Arrow Electronics | Aqua America vs. Meiko Electronics Co |
| Superior Plus vs. TEXAS ROADHOUSE | Superior Plus vs. Broadcom | Superior Plus vs. Fukuyama Transporting Co | Superior Plus vs. Wayside Technology Group |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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